The institutions of
the family, the market
and the state interact
in various ways
to form three basic
types of European
society, roughly
distributed along a
north-south axis.
 Joachim Vogel of
Statistics Sweden and
the University of Umeå
outlines the differences
in this summary
of available data.

Three Types of 
European Society

Income disparities,
class distinctions
and poverty levels
are lowest in the
Nordic countries
    The Nordic countries are characterised by comparatively large government expenditures on social programmes, high rates of labour market participation, and limited financial de pendence on the traditional family. Income disparities, class distinctions and poverty levels are the lowest in the industrial world; but the relative economic gap between generations is greater than in the rest of Europe, due largely to the early independence of young people.

The Southern European countries exhibit a pattern of relatively low expenditures on social programmes, heavy financial dependence on traditional extended families, and low levels of gainful employment, especially among women. Income disparities and class distinctions are quite pronounced and poverty levels are high, but the relative economic gap between generations is narrow.

The remaining European countries are intermediate in terms of both geographical location and institutional structure.

Link to
Figure 1

  Taxes and
Social Expenditures
There are occasional deviations from this general pattern. But on the whole, the division into three clusters of European societies is confirmed by a large and diverse body of statistical data. The groupings are illustrated in Figure 1, which indicates the extent to which the state assumes responsibility for the well-being of citizens by means of social expenditures.

The traditional family
The traditional family has the effect of redistributing material wealth between generations and the sexes. It may also provide intangible benefits, such as emotional security and personal identity. Often less appreciated is the fact that the family usually exerts social controls and psychological restraints, thus placing limits on personal freedom. Liberation from the burdens of household/caring duties and patriarchal dominance is a major issue of women's rights, for example.

Women's liberation,
the decline of the
traditional family,
and the development
of the general-welfare
state are interrelated

Link to
Figure 2
Family Index
There appears to be a more or less direct relationship between the decline of the traditional family and the development of the general welfare state. Transfer payments, public services and public-sector jobs tend to reduce financial dependence on the family, thus providing support for women who wish to enter the labour market and develop a life outside the family circle. But the relationship is clearly dialectic: Women's demands for independence, including gainful employment and a broader social network, constitute a major driving force in the expansion of the public sector.

These factors are reflected in the clustering of European countries. Traditional family patterns and rudimentary social insurance systems predominate in the southern cluster. Financial independence from the family and comparatively ambitious social programmes characterise the Nordic countries and, to a somewhat lesser extent, the countries of the intermediate cluster.

Figure 2 compares the European countries on the basis of a "traditional family index" comprised of five indicators, including average household size and the percentage of children below age thirty still residing in the parental home. The strongest traditional family patterns are to be found in Ireland, Spain, Italy, Portugal and Greece- all Catholic countries. The other extreme is exhibited by the Netherlands and the Nordic countries of Sweden, Denmark and Finland. Norway joins the remaining European countries to form the intermediate cluster on this dimension.

Sweden has the lowest
dependency ratio in
all of Europe
Despite the persistence of the traditional family in the southern cluster, it appears to be losing ground even there as a consequence of long-term social trends, including the spread of women's rights. In all European countries, the vast majority of the population is now residing in households of only one or two generations. The current outlook is for a continuing gradual decline of the traditional extended family.

The labour market

It is the labour market which provides the principal means of material well-being for most individuals in modern societies. As noted above, the nature and extent of women's opportunities in the labour market are of crucial significance for the future of the traditional family.

A more general consideration is the size of the dependency ratio, i.e. the number of individuals aged 16-84 who are gainfully employed in proportion to those in that age-range who are not employed. A high dependency ratio means that there is a relatively large segment of the population which is not participating in the labour market, and thus requires support from the family or the state.


Link to
Figure 3
Dependency Ratios
Dependency ratios are influenced by a number of factors, including the population's age structure, gender roles and the demand for labour. Not surprisingly, dependency ratios correspond closely with the three type-clusters of European societies. The lowest ratio, 41, is that of Sweden, which has until recently placed the highest priority on full employment for both men and women. The highest dependency ratio, 111, is that of Italy, with its relatively widespread early retirement and traditionally low employment frequency among women.

As indicated in Figure 3, dependency ratios are low in all of the Nordic countries, and high in most of the southern countries. The two exceptions are the United Kingdom and Portugal, which in this respect are not included in the southern cluster due to comparatively high rates of female employment.

Sweden, Finland and
the other Nordic
countries continue
to register the
world's highest
employment rates
During the 1990s, both Sweden and Finland have experienced uncharacteristically high rates of unemployment, which has had especially severe consequences for men and women in the 20-24 age-group, i.e. those trying to establish themselves in the labour market for the first time. Nevertheless, Sweden, Finland and the other Nordic countries continue to register the world's highest employment rates, which means that the region's labour market plays a greater role in providing material well-being than it does elsewhere. This suggests a direct connection between the size of the labour market and the extent of government expenditures on social programmes, an issue discussed in further detail below.

Link to
Figure 4
     Women and the public sector
Female employment is gradually changing the structure of the European labour force. In the northern cluster of countries, it is approaching the level of men, and a similar trend is evident throughout Europe. By promoting economic independence and other means of personal fulfilment, gainful employment is the key to equal opportunity for women.

The countries of Europe have been compared on the basis of a "female employment index" based on five indicators, including the ratio of male-to-female employment and the employment rate of mothers, both single and cohabiting. The resulting scores are charted in Figure 4.

Again, the three familiar clusters emerge from the data. At the low end of the scale are the Catholic countries of Ireland, Luxembourg and Southern Europe, all of which have large proportions of traditional families with full-time housewives. Norway was not included in this comparison, but the other Nordic countries ranked at the top on almost every indicator.

Gainful employment
is the key to equal
opportunity for women
In Sweden, for example, the rate of employment among women is now almost equal to that of men, although there is still a large component of part-time work. The increase in female employment during the past twenty years corresponds almost exactly with a large increase of jobs in the public sector during the same period.

One implication of this development is that much of women's previously unpaid work within the family sphere has been transferred to the public sector, where it is now compensated. This is an unparalleled public investment in the economic independence of women. Of course, it is also associated with the decline of the traditional family, and has for that reason occasioned much debate.

A series of neo- liberal
blunders has weakened
both economy and the
social insurance system
In any event, the compensation of "women's work" through the expansion of the public sector made it possible for Sweden to increase the rate of female employment and also to maintain unemployment at exceptionally low levels during the 1970s and '80s, a period of stagnation in most other European labour markets. However, that policy came to an abrupt end at the start of the 1990s, due to an economic crisis brought about by a variety of neo-liberal measures which included the deregulation of credit and currency markets, a stubbornly dogmatic anti-inflation policy, and a disastrously underfinanced tax reform.

The results included a runaway budget deficit, a four-fold rise in unemployment, and largely successful demands by neo-liberal interests for heavy cutbacks in the social insurance system. Those cutbacks have, of course, been implemented just when the protections of the social insurance system are needed most-- i.e. at a time when the labour market, due largely to a series of political blunders, has been unable to provide increasing numbers of willing and able workers with the means of supporting themselves.

The experience of
he Nordic countries
clearly indicates that
a strong state and
a strong market
tend to reinforce
each other
    The market and the state
One conclusion to be drawn from all this is that there is no contradiction between a strong state and a strong market. The experience of the Nordic countries indicates quite clearly that they actually tend to reinforce each other. In fact, it is in the Nordic region that the market has proven to be most effective as a provider of material well-being, while at the same time broadening the tax-base for an extensive public sector and social insurance system. The net effect is to reduce unemployment and limit the need for direct intervention by social authorities.

The corresponding development has been the decline of the traditional family, which is interpreted by some as lamentable and/or harmful, and by others as a positive development which creates the necessary conditions for a variety of family forms. It is in any event the antithesis of southern European society, which combines a weak state with a weak market, and heavy reliance on the traditional family.

Link to
Figure 5
Income Inequality
Link to
Figure 6
Poverty Rates

Distribution of wealth
The three types of European society can also be distinguished in terms of socio-economic inequality and levels of poverty. Disposable household income patterns are summarised in Figure 5, which indicates that the most equal distribution is to be found in Norden.The U.K. and the Southern European cluster display the opposite tendency.

The difference between the three clusters with regard to poverty levels is even more distinct. Figure 6 summarises a comparison of household incomes below the poverty level, which is defined as fifty percent of the national average for disposable income.

The poverty rate averages about five percent in the Nordic countries, between 18-27 percent in the southern cluster, and roughly twelve percent in the intermediate cluster. As a consequence of neo-liberal policies implemented during the past 15-20 years, the United Kingdom is sinking to the Southern European level.

This brief summary is based on a large body of data analysed by Joachim Vogel and his colleagues at Statistics Sweden in several reports, including:
Vogel, Joachim, "Living Conditions and Inequality in the European Union: Working Document"; Eurostat: Population and Social Conditions, E/1997-3; Luxembourg, 1997

Vogel, J and Häll, L., Living conditions and Inequality, 1975-95; Report 91 in the "Living Conditions" series, Statistics Sweden, 1997

Inter-generational differences
When it comes to inter-generational differences, however, the Nordic countries exhibit the most unequal distribution of economic resources. This is largely related to the variations in family structure which have previously been noted. In the southern cluster of countries, young adults tend to remain in the parental home until a comparatively late age, and thus gain extended access to the resources of the traditional family. This also applies to a large proportion of the elderly.

In the Nordic countries, on the other hand, young adults tend to leave their parents at an earlier stage, often before they have established themselves in the labour market or formed families of their own. In other words, young people become independent earlier in life, but pay a price during the establishment period with a significantly lower standard of living than their parents' generation. However, what this may mean in relation to the actual living standards of young people in the southern cluster of countries is difficult to say.

Most of the elderly in the Nordic countries also maintain their own households; but their poverty rates are very low due to the effects of extensive public sectors and social insurance systems, including comparatively generous pension benefits.
Concluding observations
The data reviewed here clearly indicate that, in Europe at least, the range of institutional structures is limited to three basic configurations of family, market and state.

The Nordic model combines an extensive social insurance system with labour market policies that promote full employment, equal opportunity and an equitable distribution of wealth. The broad-based labour market supports an extensive public sector and social insurance system by widening the tax base and limiting the need for direct intervention by social authorities. Thus, the lowest levels of socio-economic inequality and poverty in the industrial world are associated with a strong state and a strong market which reinforce each other.

Link to
Figure 7
Income Inequality
In contrast, the Southern European countries combine a weak state and a weak market with a correspondingly heavy reliance on the traditional family. In this type of society, the family serves to limit the effects of poverty and socio-economic inequality, especially in the case of young adults and the elderly. But levels of poverty and inequality are high, and a personal price is paid by women, young people and the elderly in the form of financial dependence on middle-aged patriarchs, who in turn bear a heavy burden of responsibility. (See Figure 7.)

See also:

General Welfare

The Price
Of Everything

During the past twenty years or so, there appears to have occurred a gradual weakening of both these types of society. Long-term social trends, particularly that of greater equality between the sexes, have the effect of undermining the patriarchal family. As for the Nordic countries, they have in recent years been subjected to a political-economic ideology which calls for a minimal state and maximal reliance on the market. The result has been a weakening of both, for the reasons noted above. Thus far, especially in Sweden and Finland, the 1990s have been a decade of economic crisis which has diminished the capacity of the labour market to support public services and social insurance systems.

Nevertheless, Sweden, Finland, Norway and Denmark remain in a class by themselves with regard to the nature and extent of social programmes, employment levels, and the distribution of wealth. Nor is there any widespread political support for the current trend toward weaker national governments and less ambitious social insurance systems. Opinion surveys in Sweden, for example, have disclosed mounting public support for the public sector and basic social insurance programmes.

However, the Nordic countries comprise an island of egalitarianism in a sea of neo-liberalism, with its evident tendency toward increasing class divisions; and there are strong forces at work to ensure that the Nordic model of society is dismantled. At this point in history, the future of that model does not appear to be very promising.

— Joachim Vogel 
March 1998 

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