Erik Bengtsson, Lund University

"Income Inequality and Structural Transformation: Evidence from Swedish Micro Data, 1870–1970”

Abstract

The argument of this paper is that long run income inequality, and especially the “Great Levelling” of incomes in industrialized countries c. 1920 to 1980, was driven by structural transformation to a degree not recognized in the literature. Previous research has built mostly on tabulated, anonymous data which did not allow for joint exploration of sectoral, geographical, occupational, and gender effects. With new micro data for Sweden from 1870 to 1970, including about 200 000 individual tax returns sampled from the archive, we use descriptive data, a jobs composition analysis, and a Mookherjee–Shorrocks decomposition to show that the transformation out of agriculture, which was a severely unequal sector in Sweden in the late 1800s and early 1900s, accounts for much of the equalization of income, together with expansion of more productive jobs in factories and offices. This was aided by emigration of labour from agriculture, and educational and other policies which facilitated structural transformation. The focus on structural change can help explain two paradoxes in the literature on twentieth century income inequality: that much equalization occurred before the growth of the welfare state, and that non-belligerents of the World Wars like Sweden saw as much equalization as belligerent countries.

Joint with Jakob Molinder and Svante Prado.

For more information about Erik Bengtsson and his interesting work - link to his website.

Contact person: Casper Worm Hansen