Top Incomes in Sweden Over the Twentieth Century

TOP INCOMES: A GLOBAL PERSPECTIVE, Vol. II, Anthony B. Atkinson and Thomas Piketty, eds., Oxford, Oxford University Press

116 Pages Posted: 31 Aug 2005 Last revised: 19 Apr 2009

See all articles by Jesper Roine

Jesper Roine

Stockholm School of Economics - Department of Economics

Daniel Waldenström

Research Institute of Industrial Economics

Date Written: 2009

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

JEL Classification: D31, H2, J3, N3

Suggested Citation

Roine, Jesper and Waldenstrom, Daniel, Top Incomes in Sweden Over the Twentieth Century (2009). TOP INCOMES: A GLOBAL PERSPECTIVE, Vol. II, Anthony B. Atkinson and Thomas Piketty, eds., Oxford, Oxford University Press. Available at SSRN: https://ssrn.com/abstract=790345

Jesper Roine (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

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

Daniel Waldenstrom

Research Institute of Industrial Economics ( email )

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

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

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