Still the Lands of Equality? Heterogeneity of Income Composition in the Nordics, 1975–2016

Roberto Iacono () and Palagi Elisa ()
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Palagi Elisa: Sant’Anna School of Advanced Studies, Institute of Economics and EMbeDS, Pisa, Italy

The B.E. Journal of Economic Analysis & Policy, 2022, vol. 22, issue 2, 221-268

Abstract: According to standard measures of income inequality, the Nordic countries rank among the most equal economies in the world. This paper studies whether and how this picture changes when the focus is on inequality of income composition, meaning the heterogeneity in individuals’ factor income shares. We show that, for all countries, a shift in capital incomes toward the top since the early 1990s causes rising heterogeneity in individuals’ factor income shares. To explain this result, we highlight the role of dual taxation systems. For Denmark in 2009–2013, Finland (1990–2007), and Norway (1991–2005), rising capital shares contributed to changes in personal income inequality, while for Sweden our results lead to disregard the capital share as a determinant of increasing income inequality.

Keywords: income composition inequality; dual income taxation; Nordic countries (search for similar items in EconPapers)
JEL-codes: D3 D31 D33 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Working Paper: Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics (2020)
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DOI: 10.1515/bejeap-2021-0165

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