Income Distribution in Sweden in a Comparative Perspective: Evidence from New LIS-data

This report employs recently available Swedish data in the LIS-database. With previous data back to 1967 and new data through 2021, we exploit the rich information in LIS to study the evolution of the Swedish income distribution in a broad comparative perspective. We start by discussing the differences in the definitions of disposable income between the national Swedish sources and LIS. Then we point at the shifts that are likely to appear in the LIS-series because of changes in the underlying Swedish data. We find that the rise in inequality in Sweden from the early 1980s to around 2013 is substantial, much larger than in most other countries and is driven by rising inequality in both the lower and the upper half of the distribution. The period since 2013 is characterized by more stable income inequality in Sweden as well as in most other countries. We also find that the level of income (adjusted for purchasing power) has risen more in Sweden than in most other countries since the early 1980s. This rise is particularly strong at the median and the top of the distribution but can to some extent also be found at the bottom of the distribution. Our analysis of drivers of rising income inequality suggests that capital income has been more important in Sweden than in other countries. The sharp rise in the share of foreign-born in the population is not a major driver of rising income inequality. The decline in the gap between pre- and post-tax and transfer income in Sweden cannot be found in other countries and appears as a driver of rising income inequality.