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The Role of the Welfare System in Narrowing the Income Distribution Gap -- the Nordic Reform Perspective (No.215, 2021)


By Li Hengsen & Feng Wenmeng, Research Department of Social Development, DRC

Research Report, No.215, 2021 (Total 6280) 2021-8-5

Abstract: The welfare system plays an important role in narrowing the income distribution gap and promoting common prosperity. Around the world, the Nordic countries Denmark, Norway and Sweden have long-established and relatively perfected welfare systems, which play a significant role in narrowing the income distribution gap. The Gini coefficient has remained below 0.30 for many years. In recent years, facing the changes of economic and social development environment at home and abroad, the welfare systems of these countries have been reformed and improved constantly. Research found that during the two periods of welfare reforms, the three countries have not only reduced the pressure on government spending and stimulated the economic and social development, but also taken full consideration on how to keep the income distribution gap within a reasonable range. The specific measures they introduced have displayed double effects on enhancing the vitality of economic development and controlling the income distribution gap. These measures can provide valuable references for China to improve its social security system in the future and to give full play to its social security system in narrowing income distribution gap and promoting shared prosperity.

Keywords: social security, income distribution, common prosperity, international experience