SSE/EFI Working Paper Series in Economics and Finance
No 625:
The Evolution of Top Incomes in an Egalitarian Society: Sweden, 1903–2004
Jesper Roine ()
and Daniel Waldenström ()
Abstract: This study presents new homogenous series of top income
shares in Sweden over the period 1903 to 2004. We find that, starting from
higher levels of inequality than in other Western countries, the income
share of the Swedish top decile drops sharply over the first eighty years
of the century. The fall is almost entirely due to a dramatic drop in the
top percentile, while the lower half of the top decile experiences
virtually no change over this period. Most of the decrease takes place
before the expansion of the welfare state, in fact, by 1950 Swedish top
income shares were already lower than in other countries. In the past
decades the Swedish top income shares developed very differently depending
on whether capital gains are included or not. Including them, Sweden’s
experience resembles that in the U.S. and the U.K. with sharp increases in
top incomes, whereas excluding them Sweden looks more like the Continental
European countries where top income shares have remained relatively
constant. A possible interpretation of our results is that Sweden over the
past 20 years has become a country where it is more important make the
right investments than to have a high salary to become rich.
Keywords: Income inequality; Income distribution; Wealth distribution; Top incomes; Welfare State; Sweden; Taxation; Capital gains; (follow links to similar papers)
JEL-Codes: D31; H20; J30; N30; (follow links to similar papers)
36 pages, April 11, 2006
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