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A Comparison between Actual Distributions of Annual and Lifetime Income: Sweden 1951-89

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  • Bjorklund, Anders

Abstract

This paper uses register data on tax assessed income from 1951 to 1989 for a representative sample of Swedish men in order to compare the distributions of annual income and 'lifetime' income. It is found that the dispersion of lifetime income is around 35 to 40 percent lower than typical cross-sections of annual income. It is income up to around 30 years of age that mainly explains this discrepancy in the magnitude of dispersions. From the age of 30 until 65 years the correlations between annual and lifetime income are quite high and the dispersion of annual income is not very much higher than the dispersion of lifetime income. An analysis of the evolution of income mobility shows that there is a slight tendency to rising mobility over time. This finding implies that the common approach to study the development of income distribution by using only annual income can be misleading. Copyright 1993 by The International Association for Research in Income and Wealth.

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  • Bjorklund, Anders, 1993. "A Comparison between Actual Distributions of Annual and Lifetime Income: Sweden 1951-89," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 377-386, December.
  • Handle: RePEc:bla:revinw:v:39:y:1993:i:4:p:377-86
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    Cited by:

    1. Giacomo Corneo, 2012. "Work Norms and the Welfare State," CESifo Economic Studies, CESifo, vol. 58(4), pages 599-625, December.
    2. Timm Bönke & Giacomo Corneo & Holger Lüthen, 2015. "Lifetime Earnings Inequality in Germany," Journal of Labor Economics, University of Chicago Press, vol. 33(1), pages 171-208.
    3. Garnero, Andrea & Hijzen, Alexander & Martin, Sébastien, 2016. "More Unequal, But More Mobile? Earnings Inequality and Mobility in OECD Countries," IZA Discussion Papers 9753, Institute for the Study of Labor (IZA).
    4. Charlotte Bartels, 2012. "Redistribution and Insurance in the German Welfare State," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(2), pages 265-295.
    5. Cathal O’Donoghue, 2001. "Redistribution over the Lifetime in the Irish Tax-Benefit System - An Application of a Prototype Dynamic Microsimulation Model for Ireland," The Economic and Social Review, Economic and Social Studies, pages 191-216.
    6. Koerselman, Kristian & Uusitalo, Roope, 2014. "The risk and return of human capital investments," Labour Economics, Elsevier, vol. 30(C), pages 154-163.
    7. Jorge Roca, 2014. "Wage cyclicality: Evidence from Spain using social security data," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, pages 173-195.

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