D4 Published development or research report or study
Inter-cohort wealth development in Finland, 1987–2016
Authors: Esa Karonen, Mikko Niemelä
Publisher: INVEST Research Flagship
Publishing place: Turku
Publication year: 2020
Series title: INVEST Working Papers
Number in series: 17
DOI: https://doi.org/10.31235/osf.io/ktb4f
Web address : https://osf.io/preprints/socarxiv/ktb4f/
Self-archived copy’s web address: https://research.utu.fi/converis/portal/detail/Publication/49556206
Abstract
This article examines inter-cohort wealth development in Finland during the period 1987–
2016. As previous research has stated that annual variation has increased over time, we aim to
improve previous research by focusing on gross, net, and financial wealth gaps between
cohorts. The opening of the Finnish financial markets and the introduction of new types of
investment instruments since the late 1980s created entirely new circumstances for business
and financial markets. We utilise the time series of the Official Statistics of Finland’s (OFS)
Household Assets. We use the marginal effects method with a generalised linear model (GLM),
and interaction terms. The results show that inter-cohort wealth inequality in gross- and net
wealth has not increased over time, and all differences are attributed to within-year variations.
As a new finding, financial wealth shows variations among three distinct investment groups,
and higher investment interest can be associated with decreasing initial investment ages among
younger cohorts. It seems that younger cohorts embraced new financial instruments much more
in early age than did their older counterparts. Overall, the results show that financial
deregulation considerably increased investment in financial assets among all cohort groups.
This article examines inter-cohort wealth development in Finland during the period 1987–
2016. As previous research has stated that annual variation has increased over time, we aim to
improve previous research by focusing on gross, net, and financial wealth gaps between
cohorts. The opening of the Finnish financial markets and the introduction of new types of
investment instruments since the late 1980s created entirely new circumstances for business
and financial markets. We utilise the time series of the Official Statistics of Finland’s (OFS)
Household Assets. We use the marginal effects method with a generalised linear model (GLM),
and interaction terms. The results show that inter-cohort wealth inequality in gross- and net
wealth has not increased over time, and all differences are attributed to within-year variations.
As a new finding, financial wealth shows variations among three distinct investment groups,
and higher investment interest can be associated with decreasing initial investment ages among
younger cohorts. It seems that younger cohorts embraced new financial instruments much more
in early age than did their older counterparts. Overall, the results show that financial
deregulation considerably increased investment in financial assets among all cohort groups.
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