Political Economy of the Finnish Welfare State

Abstract

In its basic outline, the Finnish welfare state meets the broad characteristics of a Nordic type of welfare state: an emphasis on public services and reliance on relatively autonomous local administration for their provision, as well as, in social security, a combination of universal flat rate benefits and earnings-related social insurance. Yet the Finnish case has certain salient features of its own; the system is subject to tight economic constraints, and welfare expenditure has been constrained to the dividend left over by economic growth. Even in a cyclical context, the balanced budget constraint has made welfare expenditure clearly pro-cyclical.