Income inequality in Sweden 1870–1970: Evidence from micro data
Gustafscenen Session 2: Labour, living standards and inequality organized by Erik Bengtsson, Kathryn Gary, Tobias Karlsson, Malin Nilsson and Jakob Molinder
Abstract
We present new estimates of the market income distribution in Sweden from 1870 to 1970, building on a new 1 % sample of taxpayers in 1870, 1900 and 1920, a 0.5 % sample in 1940 and 1950, the census in 1930 and a 1970 sample of all adult Swedes born on the 15th day of a month. Going beyond the more aggregate level of previous studies of long-run income inequality to micro data with data on individuals, we bring out the importance of jobs and gender, and add a perspective including the entire income distribution, including low-income earners. For those who earned too little to pay tax (in 1900 70 %, in 1950 33 %), we estimate incomes by using other sources. We show that inequality was very high in 1870, decreasing until the 1900s, with a temporary spike of top incomes in 1920. The rural sector was very unequal in 1870 (almost as unequal as the urban). Beyond the rural-urban composition, we also show that domestic service was a very large sector in the beginning of our period, with low wages, and the shift out of domestic service (especially for women) induced greater equality, when people shifted to higher-paid jobs. Generally, the upgrading of working-class jobs to better paid, more skilled jobs is important to understand the equalization of incomes. In 1870 low skilled farm labourers and domestic servants were a large part of the working class but by 1930 the jobs structure had been upgraded. We also investigate the role of capital incomes versus labour incomes for equalization, and themes such as the shift away from farming, the gender gap, and regional and urban-rural income differences.
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