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Title:The evolution of top incomes in an egalitarian society: Sweden, 1903 - 2004 PDF Logo
Authors:Roine, Jesper
Waldenström, Daniel
Issue Date:2006
Series/Report no.:SSE/EFI Working Paper Series in Economics and Finance 625
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.
Subjects:Income inequality
Income distribution
Wealth distribution
Top incomes
Welfare State
Sweden
Taxation
Capital gains
JEL:D31
H20
J30
N30
Document Type:Working Paper
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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