Income inequality in Denmark

Denmark has been noted as having one of the lowest income inequality ratings in the world and has been known to maintain relative stability in this metric throughout decades past.^[1] The OECD data of 2016 gives Denmark a Gini coefficient of 0.249, below the OECD average of 0.315.^[2] The OECD in 2013 ranked Denmark with having a 0.254 Gini coefficient, ranking third behind Iceland and Norway respectively as the countries with the lowest income inequality qualifications.^[3] Eurostat ranked Denmark with a Gini coefficient of equivalised disposable income of 27.0 in 2022, having fallen for three straight years from a high of 27.8 in 2018. [1] The Gini coefficients are measured using a 0–1 calibration where 0 equals complete equality and 1 equals complete inequality. "Wage-distributive outcomes" and their effect on income equality have been noted since the 1970s and 80s.^[1] Denmark, along with other Nordic countries, such as Finland and Sweden, has long held a stable low wage inequality index as well.^[1]

The scope and strength of Denmark's redistributive system and the latitude of the welfare state are the reasons for Denmark's low levels of inequality.^{[citation needed]} The welfare system, in particular, allows for negligible effects that market income inequality can have on "disposable income inequality (i.e. market income after taxes and transfers)".^[2] The rise in income inequality all over the world,^{[citation needed]} though, has not shielded Denmark and has seen its inequality increase in the same rate as all the other OECD countries, pairing Denmark with the likes of the United States and Canada with their pace in inequality intensification.^[2] The global course towards rising income inequality in the rich world and in Denmark has been attributed to an increase in capital incomes, a rising gap in "earnings dispersion", and structural changes that have taken place within households; the long-term propellant of inequality, though, has been skill-biased technical change.^[4][2] Rising inequality in Denmark can be illustrated by how the boon of GDP growth has gone to households of higher incomes, though the income distribution has been relatively equitably discharged throughout the country from the mid-1980s to the mid-2000s.^[2]