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Top Incomes in Sweden over the Twentieth Century

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  • Roine, Jesper

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Waldenström, Daniel

    ()
    (Dept. of Economics, Stockholm School of Economics)

Abstract

This paper presents homogenous series of top income shares in Sweden from 1903 to 2003 using individual tax returns data. We find that Swedish top incomes have developed more similarly to the US, Canada and the UK than to other continental European countries when capital gains are included. The top income shares are U-shaped over time, falling steadily until around 1980 when they start increasing again. Around 2000 they reach levels similar to those found around 1950, before the expansion of the Swedish welfare state. However, unlike the Anglo-Saxon countries, where the recent increases were mainly driven by increased wage earnings inequality, Swedish top income shares have risen almost exclusively due to capital gains, a finding consistent with relatively high marginal wage taxes and internationally high price increases in financial and real estate markets since 1980. When excluding capital gains the increase in top income shares since 1980 almost disappears and the Swedish experience looks more like that of continental Europe. Furthermore, we also find that the largest decrease of top income shares happens between 1935 and the beginning of the 1950s, but not (as in the US and in France) during the war years, but before 1939 and after 1945 suggesting that the Swedish development was more driven by policy than by exogenous shocks.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 602.

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Length: 78 pages
Date of creation: 15 Aug 2005
Date of revision:
Handle: RePEc:hhs:hastef:0602

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Keywords: Income inequality; Top incomes; Sweden; Taxation;

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References

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  1. Daniel R. Feenberg & James M. Poterba, 1993. "Income Inequality and the Incomes of Very High-Income Taxpayers: Evidence from Tax Returns," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 145-177 National Bureau of Economic Research, Inc.
  2. Morrisson, Christian, 2000. "Historical perspectives on income distribution: The case of Europe," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 4, pages 217-260 Elsevier.
  3. Anthony B. Atkinson & Wiemer Salverda, 2005. "Top Incomes In The Netherlands And The United Kingdom Over The 20th Century," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 883-913, 06.
  4. Fabien Dell, 2005. "Top Incomes in Germany and Switzerland Over the Twentieth Century," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 412-421, 04/05.
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Cited by:
  1. Cecilia García-Peñalosa & Elsa Orgiazzi, 2013. "Factor Components of Inequality: A Cross-Country Study," Working Papers halshs-00802825, HAL.
  2. Gustafsson, Björn Anders & Jansson, Birgitta, 2007. "Top Incomes in Sweden during Three-Quarters of a Century: A Micro Data Approach," IZA Discussion Papers 2672, Institute for the Study of Labor (IZA).
  3. Roine, Jesper & Waldenström, Daniel, 2011. "On the Role of Capital Gains in Swedish Income Inequality," Working Paper Series 870, Research Institute of Industrial Economics.
  4. Roine, Jesper & Waldenstrom, Daniel, 2008. "The evolution of top incomes in an egalitarian society: Sweden, 1903-2004," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 366-387, February.
  5. Cecilia Garcia Peñalosa & Orgiazzi, E., 2011. "GINI DP 12: Factor Components of Inequality. A Cross-Country Study," GINI Discussion Papers 12, AIAS, Amsterdam Institute for Advanced Labour Studies.
  6. Henrekson, Magnus & Roine, Jesper, 2005. "Promoting Entrepreneurship in the Welfare State," Working Paper Series 653, Research Institute of Industrial Economics, revised 11 Jan 2006.

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