SSE/EFI Working Paper Series in Economics and Finance
No 602:
Top Incomes in Sweden over the Twentieth Century
Jesper Roine ()
and Daniel Waldenström ()
Abstract: This paper presents homogenous series of top income shares
in Sweden from 1903 to 2003 using individual tax returns data. We find that
Swedish top incomes have developed more similarly to the US, Canada and the
UK than to other continental European countries when capital gains are
included. The top income shares are U-shaped over time, falling steadily
until around 1980 when they start increasing again. Around 2000 they reach
levels similar to those found around 1950, before the expansion of the
Swedish welfare state. However, unlike the Anglo-Saxon countries, where the
recent increases were mainly driven by increased wage earnings inequality,
Swedish top income shares have risen almost exclusively due to capital
gains, a finding consistent with relatively high marginal wage taxes and
internationally high price increases in financial and real estate markets
since 1980. When excluding capital gains the increase in top income shares
since 1980 almost disappears and the Swedish experience looks more like
that of continental Europe. Furthermore, we also find that the largest
decrease of top income shares happens between 1935 and the beginning of the
1950s, but not (as in the US and in France) during the war years, but
before 1939 and after 1945 suggesting that the Swedish development was more
driven by policy than by exogenous shocks.
Keywords: Income inequality; Top incomes; Sweden; Taxation; (follow links to similar papers)
JEL-Codes: D31; H20; J30; N30; (follow links to similar papers)
78 pages, August 15, 2005
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