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The Evolution of Top Incomes in an Egalitarian Society: Sweden, 1903–2004

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  • Roine, Jesper

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

  • Waldenström, Daniel

    () (Research Institute of Industrial Economics)

Abstract

This study presents new homogenous series of top income shares in Sweden over the period 1903 to 2004. We find that, starting from higher levels of inequality than in other Western countries, the income share of the Swedish top decile drops sharply over the first eighty years of the century. The fall is almost entirely due to a dramatic drop in the top percentile, while the lower half of the top decile experiences virtually no change over this period. Most of the decrease takes place before the expansion of the welfare state, in fact, by 1950 Swedish top income shares were already lower than in other countries. In the past decades the Swedish top income shares developed very differently depending on whether capital gains are included or not. Including them, Sweden’s experience resembles that in the U.S. and the U.K. with sharp increases in top incomes, whereas excluding them Sweden looks more like the Continental European countries where top income shares have remained relatively constant. A possible interpretation of our results is that Sweden over the past 20 years has become a country where it is more important make the right investments than to have a high salary to become rich.

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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 625.

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Length: 36 pages
Date of creation: 11 Apr 2006
Date of revision:
Handle: RePEc:hhs:hastef:0625

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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
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Keywords: Income inequality; Income distribution; Wealth distribution; Top incomes; Welfare State; Sweden; Taxation; Capital gains;

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  1. 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.
  2. A Bjorklund & Richard Freeman, 1995. "Generating Equality and Eliminating Poverty the Swedish Way," CEP Discussion Papers dp0228, Centre for Economic Performance, LSE.
  3. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
  4. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income," NBER Working Papers 11842, National Bureau of Economic Research, Inc.
  5. Dell, Fabien & Piketty, Thomas & Saez, Emmanuel, 2005. "Income and Wealth Concentration in Switzerland Over the 20th Century," CEPR Discussion Papers 5090, C.E.P.R. Discussion Papers.
  6. Alvaredo, Facundo & Saez, Emmanuel, 2006. "Income and Wealth Concentration in Spain in a Historical and Fiscal Perspective," CEPR Discussion Papers 5836, C.E.P.R. Discussion Papers.
  7. Henrekson, Magnus & Jakobsson, Ulf, 2003. "The Swedish Model of Corporate Ownership and Control in Transition," Working Paper Series in Economics and Finance 521, Stockholm School of Economics, revised 16 Apr 2003.
  8. Apel,M., 1994. "An Expenditure-Based Estimate of Tax Evasion in Sweden," Papers 1, Uppsala - Working Paper Series.
  9. Björklund, Anders & Palme, Mårten, 2001. "The Evolution of Income Inequality During the Rise of the Swedish Welfare State 1951 to 1973," Working Paper Series in Economics and Finance 0450, Stockholm School of Economics, revised 07 Jun 2001.
  10. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1, August.
  11. Lindert, Peter H., 2000. "Three centuries of inequality in Britain and America," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 3, pages 167-216 Elsevier.
  12. Lindbeck, Assar, 2006. "The Welfare State -- Background, Achievements, Problems," Working Paper Series 662, Research Institute of Industrial Economics.
  13. Roine, Jesper & Waldenström, Daniel, 2005. "Top Incomes in Sweden over the Twentieth Century," Working Paper Series in Economics and Finance 602, Stockholm School of Economics.
  14. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," NBER Working Papers 11955, National Bureau of Economic Research, Inc.
  15. 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.
  16. 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.
  17. Anthony B. Atkinson, 2005. "Comparing the Distribution of Top Incomes Across Countries," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 393-401, 04/05.
  18. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did Productivity Growth Go? Inflation Dynamics and the Distribution of Income," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 67-150.
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  1. ”Arbetslinjen” medför barnfattigdom
    by Fred in Fred Torssander on 2012-05-31 16:43:31
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