IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/1543.html

Must Capital Income Increase Long-Term Inequality? Evidence from Sweden 1991–2021

Author

Listed:
  • Bergh, Andreas

    (Department of Economics, Lund University, and)

  • Nordin, Martin

    (AgriFood Economics Centre and Department of Economics)

Abstract

Capital income is known to increase income inequality when measured on an annual basis, but the role of personal capital income in long-run inequality is rarely studied. Theoretically, capital income can increase or decrease long-term inequality depending on the correlation with other income. We examine, using Swedish register data, the evolution of annual and long-term income inequality in Sweden 1991–2021, using disposable income with and without capital income. Capital income had a marginally equalizing effect on long-term inequality for the period 1991 to 2006 but added substantially to long-term inequality for the period 2007 to 2021. To fully understand the distributional effects of capital income, a long-term perspective is needed.

Suggested Citation

  • Bergh, Andreas & Nordin, Martin, 2025. "Must Capital Income Increase Long-Term Inequality? Evidence from Sweden 1991–2021," Working Paper Series 1543, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1543
    as

    Download full text from publisher

    File URL: https://www.ifn.se/wfiles/wp/wp1543.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1255-1310.
    2. Edmond Berisha & John Meszaros, 2020. "Long-Term Rates, Capital Shares, and Income Inequality," Open Economies Review, Springer, vol. 31(3), pages 619-635, July.
    3. Carla Krolage & Andreas Peichl & Daniel Waldenström, 2022. "Long-run trends in top income shares: The role of income and population growth," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 97-118, March.
    4. Jesper Roine & Daniel Waldenström, 2012. "On The Role Of Capital Gains In Swedish Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(3), pages 569-587, September.
    5. Florian Hoffmann & David S. Lee & Thomas Lemieux, 2020. "Growing Income Inequality in the United States and Other Advanced Economies," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 52-78, Fall.
    6. Bengtsson, Erik & Waldenström, Daniel, 2018. "Capital Shares and Income Inequality: Evidence from the Long Run," The Journal of Economic History, Cambridge University Press, vol. 78(3), pages 712-743, September.
    7. repec:hal:pseose:halshs-01109372 is not listed on IDEAS
    8. Fräßdorf, Anna & Grabka, Markus M. & Schwarze, Johannes, 2011. "The Impact of Household Capital Income on Income Inequality - A Factor Decomposition Analysis for the UK, Germany and the USA," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(1), pages 35-56.
    9. Miguel Artola Blanco & Luis Bauluz & Clara Martínez-Toledano, 2021. "Wealth in Spain 1900–2017 A Country of Two Lands [The real estate and credit bubble: evidence from Spain]," The Economic Journal, Royal Economic Society, vol. 131(633), pages 129-155.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roberto Iacono & Elisa Palagi, 2020. "Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics," LEM Papers Series 2020/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," Working Papers hal-02878153, HAL.
    3. Waldenstrom, Daniel & Bastani, Spencer, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," CEPR Discussion Papers 12880, C.E.P.R. Discussion Papers.
    4. Bartels, Charlotte & Kersting, Felix & Wolf, Nikolaus, 2021. "Testing Marx. Income Inequality, Concentration, and Socialism in Late 19th Century Germany," SocArXiv 5y9wf, Center for Open Science.
    5. MADSEN, Jakob B, 2018. "Is Inequality Increasing in r-g? The Dynamics of Capital’s Income Share in the UK, 1210-2013," Discussion paper series HIAS-E-70, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    6. Matthew Fisher-Post, 2020. "Factor Shares in the long run," World Inequality Lab Working Papers hal-02876978, HAL.
    7. Dirk Bezemer & Anna Samarina, 2019. "Debt shift, financial development and income inequality," DNB Working Papers 646, Netherlands Central Bank, Research Department.
    8. Madsen, Jakob B., 2019. "Wealth and inequality over eight centuries of British capitalism," Journal of Development Economics, Elsevier, vol. 138(C), pages 246-260.
    9. Jakob Brochner Madsen, 2016. "Wealth And Inequality In Eight Centuries Of British Capitalism," Monash Economics Working Papers 20-16, Monash University, Department of Economics.
    10. Roberto Iacono & Marco Ranaldi, 2023. "The Evolution of Income Composition Inequality in Italy, 1989–2016," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(1), pages 124-149, March.
    11. Thomas Piketty & Li Yang, 2022. "Income and Wealth Inequality in Hong Kong, 1981–2020: The Rise of Pluto-Communism? [Top Wealth Shares in the UK over More than a Century]," The World Bank Economic Review, World Bank, vol. 36(4), pages 803-834.
    12. Roberto Iacono & Marco Ranaldi, 2018. "Sources of Inequality in Italy," Working Papers 479, ECINEQ, Society for the Study of Economic Inequality.
    13. Eric Bengtsson & Engelbert Stockhammer, 2018. "Wages, income distribution and economic growth in Scandinavia," Working Papers PKWP1811, Post Keynesian Economics Society (PKES).
    14. Giovanni Federico & Alessandro Nuvolari & Michelangelo Vasta, 2023. "Inequality in Pre‐Industrial Europe (1260–1850): New Evidence From the Labor Share," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(2), pages 347-375, June.
    15. Xunhua Tu & Jie Yan & Jing Zheng, 2024. "Income composition inequality of Chinese residents and fiscal redistribution effect: An empirical analysis on individual income tax and transfer system," PLOS ONE, Public Library of Science, vol. 19(1), pages 1-21, January.
    16. Tarek Benjamin Moll & Lukasz Rachel & Pascual Restrepo, 2019. "Uneven Growth: Automation’s Impact on Income and Wealth Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-333, Boston University - Department of Economics.
    17. Ignacio Flores, 2021. "The capital share and income inequality: Increasing gaps between micro and macro-data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(4), pages 685-706, December.
    18. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2022. "The big bang: Stock market capitalization in the long run," Journal of Financial Economics, Elsevier, vol. 145(2), pages 527-552.
    19. Minniti, Antonio & Prettner, Klaus & Venturini, Francesco, 2025. "AI innovation and the labor share in European regions," European Economic Review, Elsevier, vol. 177(C).
    20. Iacono Roberto & Palagi Elisa, 2022. "Still the Lands of Equality? Heterogeneity of Income Composition in the Nordics, 1975–2016," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(2), pages 221-268, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:1543. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elisabeth Gustafsson (email available below). General contact details of provider: https://edirc.repec.org/data/iuiiise.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.