Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1543: Must Capital Income Increase Long-Term Inequality? Evidence from Sweden 1991–2021

Andreas Bergh () and Martin Nordin
Additional contact information
Andreas Bergh: Department of Economics, Lund University, and, Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Martin Nordin: AgriFood Economics Centre and Department of Economics, Postal: Lund University

Abstract: Capital income is known to increase income inequality when measured on an annual basis, but the role of personal capital income in long-run inequality is rarely studied. Theoretically, capital income can increase or decrease long-term inequality depending on the correlation with other income. We examine, using Swedish register data, the evolution of annual and long-term income inequality in Sweden 1991–2021, using disposable income with and without capital income. Capital income had a marginally equalizing effect on long-term inequality for the period 1991 to 2006 but added substantially to long-term inequality for the period 2007 to 2021. To fully understand the distributional effects of capital income, a long-term perspective is needed.

Keywords: Income distribution; Capital income; Inequality; Register data

JEL-codes: D31; D63; E22

Language: English

12 pages, November 24, 2025

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