Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/82585 
Year of Publication: 
2011
Series/Report no.: 
Working Paper No. 2011:7
Publisher: 
Uppsala University, Department of Economics, Uppsala
Abstract: 
Realized capital gains are typically disregarded in the study of income inequality. We show that in the case of Sweden this severely underestimates the actual increase in inequality and, in particular, top income shares during recent decades. Using micro panel data to average incomes over longer periods and re-rank individuals according to income excluding capital gains, we show that capital gains indeed are a reoccurring addition to rather than a transitory component in top incomes. Doing the same for lower income groups, however, makes virtually no difference. We also try to find the roots of the recent surge in capital gains-driven inequality in Sweden since the 1980s. While there are no evident changes in terms of who earns these gains (high wage earners vs. top capital income earners), the primary driver instead seems to be the drastic asset price increases on the post-1980 deregulated financial markets.
Subjects: 
Top incomes
Income inequality
Capital gains
Capital income
Sweden
Welfare state
JEL: 
D31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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