Inherited Wealth over the Path of Development: Sweden, 1810–2010

89 Pages Posted: 31 Dec 2014  

Henry Ohlsson

Uppsala University - Department of Economics

Jesper Roine

Stockholm School of Economics - Department of Economics

Daniel Waldenström

Uppsala University - Department of Economics; Research Institute of Industrial Economics (IFN)

Date Written: June 28, 2014

Abstract

Inherited wealth has attracted much attention recently, much due to the research by Thomas Piketty (Piketty, 2011; 2014). The discussion has mainly revolved around a long-run contrast between Europe and the U.S., even though data on explicit historical inheritance flows are only really available for France and to some extent for the U.K. We study the long-run evolution of inherited wealth in Sweden over the past two hundred years. The trends in Sweden are similar to those in France and the U.K: beginning at a high level in the nineteenth century, falling sharply in the interwar era and staying low thereafter, but tending to increase in recent years. The levels, however, differ greatly. The Swedish flows were only half of those in France and the U.K. before 1900 and also much lower after 1980. The main reason for the low levels in the nineteenth century is that the capital-income ratio is much lower than in “Old Europe”. In fact, the Swedish capital-income ratio was similar to that in the U.S., but the savings and growth rates were much lower in Sweden than in the U.S. Rapid income growth following industrialization and increasing savings rates were also important factors behind the development of the capital-income ratio and the inheritance flow during the twentieth century. The recent differences in inheritance flows have several potential explanations related to the Swedish welfare state and pension system. Sweden was “un-European” during the nineteenth century because the country was so poor, Sweden is “un-European” today because so much wealth formation has taken place within the welfare state and the occupational pension systems.

Keywords: inheritance, capital accumulation, inverse mortality multiplier

JEL Classification: D30, J10, N10

Suggested Citation

Ohlsson, Henry and Roine, Jesper and Waldenström, Daniel, Inherited Wealth over the Path of Development: Sweden, 1810–2010 (June 28, 2014). IFN Working Paper No. 1033. Available at SSRN: https://ssrn.com/abstract=2543475

Henry Ohlsson

Uppsala University - Department of Economics ( email )

Box 513
Uppsala, SE-75120
Sweden
+46 18 471 51 04 (Phone)

HOME PAGE: http://www.uueconomics.se/henryo/

Jesper Roine

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46-8-7369000 (Phone)

Daniel Waldenström (Contact Author)

Uppsala University - Department of Economics ( email )

Box 513
SE-75120 Uppsala
Sweden

HOME PAGE: http://www.uueconomics.se/danielw

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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