Wealth Dynamics in the 1980s and 1990s: Sweden and the United States
Given differences in public saving programs between Sweden and the United States, an examination of household private wealth accumulation in these two countries can be enlightening. In this paper we examine wealth inequality and mobility in Sweden and the United States over the past decade. We show that wealth inequality has been significantly greater in the United States than in Sweden and, while remaining relatively constant since the mid-1980s in Sweden, has increased in the United States. In addition to less inequality and a higher median wealth, we also show that wealth quintile mobility in the 1990s has been 25.7 percent higher in Sweden, as measured by Shorrocks’ index. Noting the role of various demographic components in shaping the patterns of wealth mobility as well as the importance of the initial wealth distribution, we utilize a matching algorithm that controls for these differences. Matching on the initial wealth distribution alone accounts for most of the mobility difference between the two countries and yields a Shorrocks’ index in the United States 11.1 percent less than that in Sweden. Adjusting for the large degree of imputation in the Swedish data, the U.S. index is only 3.4 percent to 6.1 percent less than that of Sweden. Along with exploring the role of racial composition differences, we conclude that demographic vari- ation between Sweden and the United States plays very little role in explaining wealth mobility beyond that explained by the initial wealth distribution. Despite the higher quintile mobility in Sweden, dollar mobility is still higher in the United States.
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