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|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden|
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Domeij & Martin Floden, 2010.
"Inequality Trends in Sweden 1978-2004,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 179-208, January.
- Domeij, David & Floden, Martin, 2009. "Inequality Trends in Sweden 1978-2004," SSE/EFI Working Paper Series in Economics and Finance 720, Stockholm School of Economics.
- David Domeij & Martin Floden, 2009. "Code and data files for "Inequality Trends in Sweden 1978-2004"," Computer Codes 09-203, Review of Economic Dynamics.
- Edin, Per-Anders & Fredriksson, Peter, 2000.
"LINDA - Longitudinal INdividual DAta for Sweden,"
Working Paper Series
2000:19, Uppsala University, Department of Economics.
- Roine, Jesper & Waldenström, Daniel, 2006.
"The Evolution of Top Incomes in an Egalitarian Society: Sweden, 1903–2004,"
SSE/EFI Working Paper Series in Economics and Finance
625, Stockholm School of Economics.
- 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.
- 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.
- Jesper Roine & Daniel Waldenström, 2011.
"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.
- 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.
- Roine, Jesper & Waldenström, Daniel, 2005. "Top Incomes in Sweden over the Twentieth Century," SSE/EFI Working Paper Series in Economics and Finance 602, Stockholm School of Economics.
When requesting a correction, please mention this item's handle: RePEc:hhs:uunewp:2011_007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katarina Grönvall)
If references are entirely missing, you can add them using this form.