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What Happened to the Incomes of the Rich during the Great Levelling? Evidence from Swedish Individual-level Data, 1909–1950

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  • Bengtsson, Erik

    (Department of Economic History, Lund University)

  • Molinder, Jakob

    (Department of Economic History, Uppsala University)

Abstract

Much of the income equalization that took place during the first half of the twentieth century was driven by shifts in the shares of the incomes of the rich, such as the top 1 percent. But the available studies using tabulated data have not been wholly able to account for the relative decline in top earners’ incomes. In this paper, we present the first evidence on the composition of the top groups from the Belle Epoque to the early post-WW2 period. Using information on 21,055 individual tax-payers in two elite areas in greater Stockholm, we show that the absolute top stratum (the richest 0.1 percent) was dominated by an economic elite of CEOs and bankers, while a remarkably large fraction of the top 1 percent consisted of professionals such as medical doctors and engineers. There was a distinction within the elite between capital-rich “rentiers” and those affluent whose income came from wages and business. The incomes of the top stratum were built on the ownership or leadership of companies producing mass consumption goods, machinery, or banking and insurance. We relate the peak of income inequality in the first quarter of the twentieth century to the historical circumstances of a globalized economy with growing mass markets in all the industrializing countries. These circumstances, jointly with an economic policy that was still relatively laissez faire allowed great fortunes to be accumulated. In the 1920s and 1930s policy turned away from globalization and to stronger regulation, at the same time as steeper competition and growing unionization undermined the super profits of the previous quarter- century. Increased state interventionism in the economy and an expansive education policy also undermined the high relative incomes of professionals; we document the declining advantages of professions such as medical doctors, pharmacists, and lawyers when compared with the average income throughout the period.

Suggested Citation

  • Bengtsson, Erik & Molinder, Jakob, 2021. "What Happened to the Incomes of the Rich during the Great Levelling? Evidence from Swedish Individual-level Data, 1909–1950," Lund Papers in Economic History 230, Lund University, Department of Economic History.
  • Handle: RePEc:hhs:luekhi:0230
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    References listed on IDEAS

    as
    1. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," PSE-Ecole d'économie de Paris (Postprint) halshs-00754875, HAL.
    2. Karlsson, Tobias & Lundh, Christer, 2015. "The Gothenburg Population Panel 1915-1943: GOPP Version 6.0," Göteborg Papers in Economic History 18, University of Gothenburg, Department of Economic History.
    3. 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.
    4. Schön, Lennart & Krantz, Olle, 2015. "New Swedish Historical National Accounts since the 16th Century in Constant and Current Prices," Lund Papers in Economic History 140, Lund University, Department of Economic History.
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    More about this item

    Keywords

    incomes; inequality; income distribution; Sweden; élites; tax data; Stockholm;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-

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