On the Role of Capital Gains in Swedish Income Inequality
Realized capital gains are typically disregarded in the study of income inequality. We show that in the case of Sweden this severely underestimates the actual increase in inequality and, in particular, top income shares during recent decades. Using micro panel data to average incomes over longer periods and re-rank individuals according to income excluding capital gains, we show that capital gains indeed are a reoccurring addition to rather than a transitory component in top incomes. Doing the same for lower income groups, however, makes virtually no difference. We also try to find the roots of the recent surge in capital gains-driven inequality in Sweden since the 1980s. While there are no evident changes in terms of who earns these gains (high wage earners vs. top capital income earners), the primary driver instead seems to be the drastic asset price increases on the post-1980 deregulated financial markets.
|Date of creation:||13 Apr 2011|
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"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.
- Roine, Jesper & Waldenström, Daniel, 2006. "The Evolution of Top Incomes in an Egalitarian Society; Sweden, 1903–2004," Working Paper Series 667, Research Institute of Industrial Economics.
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"Inequality Trends in Sweden 1978-2004,"
SSE/EFI Working Paper Series in Economics and Finance
720, Stockholm School of Economics.
- Chiaki Moriguchi & Emmanuel Saez, 2006. "The Evolution of Income Concentration in Japan, 1886-2002: Evidence from Income Tax Statistics," NBER Working Papers 12558, National Bureau of Economic Research, Inc.
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"Common Trends and Shocks to Top Incomes: A Structural Breaks Approach,"
The Review of Economics and Statistics,
MIT Press, vol. 93(3), pages 832-846, August.
- Roine, Jesper & Waldenström, Daniel, 2009. "Common Trends and Shocks to Top Incomes – A Structural Breaks Approach," Working Paper Series 801, Research Institute of Industrial Economics.
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