The evolution of top incomes in an egalitarian society: Sweden, 1903–2004

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in 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.

Long-Run Trends in the Distribution of Income and Wealth

“…Saez and Veall (2005) show that Canadian top income shares are negatively correlated with top marginal income tax rates. Using a similar specification Roine and Waldenström (2008) conclude that changes in top rates in Sweden also have a significant effect on the Swedish development over the twentieth century, and Jäntti, Riihelä and Sundström (2010) conclude that the drop in top rates is a key determinant in the increase of Finnish top shares. Atkinson and Leigh (2013) is associated with a rise in the share of the top one percent.…”

“…A practical empirical problem, however, is that in most cases we lack data on the cross distributions over long periods of time. Roine and Waldenström (2008), studying Sweden, is an exception. Thanks to a particular form of combined income and wealth tax it is possible to calculate the distribution of wealth ranked both by wealth and total income.…”

“…23 Taxable transfers have typically become more important over time but are also very different in size across countries. Roine and Waldenström (2008) calculate top shares both including and excluding such transfers for Sweden.…”

Multidimensional Measurement of Richness: Theory and an Application to Germany

“…The scarce research on affluence has concentrated nearly without exception on proportions of rich individuals within a given population (headcount ratio) or the income share of the top p% of the income distribution (see e.g. Atkinson, 2005;Dell, 2005;Piketty, 2005;Saez, 2005;Saez and Veall, 2005;Piketty and Saez, 2006;Atkinson and Piketty, 2007;Roine and Waldenström, 2008). However, neither the headcount nor income shares are satisfying measures for either poverty or richness.…”

A positive theory of economic growth and the distribution of income

“…We doubt that it is a full explanation because the data after 1980 show that the rise in the pre-tax share of the top one percent can be seen in the United States, the United Kingdoms, Canada and Sweden but not in France and the Netherlands. Roine and Waldenstrom (2006) The share of pre-tax incomes received by the top one percent includes income from reported capital gains. That makes it more volatile, rising in periods when owners of shares choose to report gains in excess of losses.…”