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A Comparison Between Actual Distributions Of Annual And Lifetime Income: Sweden 1951–89

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  • Anders Björklund

Abstract

This paper uses register data on tax assessed income from 1951 to 1989 for a representative sample of Swedish men in order to compare the distributions of annual income and “lifetime” income. It is found that the dispersion of lifetime income is around 35 to 40 percent lower than typical cross‐sections of annual income. It is income up to around 30 years of age that mainly explains this discrepancy in the magnitude of dispersions. From the age of 30 until 65 years the correlations between annual and lifetime income are quite high and the dispersion of annual income is not very much higher than the dispersion of lifetime income. An analysis of the evolution of income mobility shows that there is a slight tendency to rising mobility over time. This finding implies that the common approach to study the development of income distribution by using only annual income can be misleading.

Suggested Citation

  • Anders Björklund, 1993. "A Comparison Between Actual Distributions Of Annual And Lifetime Income: Sweden 1951–89," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 377-386, December.
    • Handle: RePEc:bla:revinw:v:39:y:1993:i:4:p:377-386
    DOI: 10.1111/j.1475-4991.1993.tb00468.x
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    Cited by:

    1. Stiglitz, Joseph E. & Yun, Jungyoll, 2005. "Integration of unemployment insurance with retirement insurance," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2037-2067, December.
    2. Riphahn, Regina T. & Schnitzlein, Daniel D., 2016. "Wage mobility in East and West Germany," Labour Economics, Elsevier, vol. 39(C), pages 11-34.
    3. Fatih Guvenen & Greg Kaplan & Jae Song & Justin Weidner, 2017. "Lifetime Incomes in the United States over Six Decades," NBER Working Papers 23371, National Bureau of Economic Research, Inc.
    4. David Brady & Marco Giesselmann & Ulrich Kohler & Anke Radenacker, 2018. "How to measure and proxy permanent income: evidence from Germany and the U.S," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(3), pages 321-345, September.
    5. Garnero, Andrea & Hijzen, Alexander & Martin, Sébastien, 2019. "More unequal, but more mobile? Earnings inequality and mobility in OECD countries," Labour Economics, Elsevier, vol. 56(C), pages 26-35.
    6. Mike Brewer & Monica Costa Dias & Jonathan Shaw, 2012. "Lifetime inequality and redistribution," IFS Working Papers W12/23, Institute for Fiscal Studies.
    7. Sadegh Eshaghnia & James J. Heckman & Rasmus Landersø & Rafeh Qureshi, 2022. "Intergenerational Transmission of Family Influence," NBER Working Papers 30412, National Bureau of Economic Research, Inc.
    8. Eisenhauer, Philipp & Pfeiffer, Friedhelm, 2008. "Assessing intergenerational earnings persistence among German workers," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 119-137.
    9. Cathal O’Donoghue, 2001. "Redistribution over the Lifetime in the Irish Tax-Benefit System - An Application of a Prototype Dynamic Microsimulation Model for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 191-216.
    10. Martin Trombetta, 2022. "Los efectos distributivos de la movilidad de ingresos: evidencia para América Latina," Asociación Argentina de Economía Política: Working Papers 4604, Asociación Argentina de Economía Política.
    11. Martín Trombetta, 2023. "The distributional implications of short-term income mobility: evidence for Latin America," Working Papers 241, Red Nacional de Investigadores en Economía (RedNIE).
    12. Koerselman, Kristian & Uusitalo, Roope, 2014. "The risk and return of human capital investments," Labour Economics, Elsevier, vol. 30(C), pages 154-163.
    13. Glaubitz, Rick & Harnack-Eber, Astrid & Wetter, Miriam, 2022. "The gender gap in lifetime earnings: The role of parenthood," Discussion Papers 2022/3, Free University Berlin, School of Business & Economics.
    14. Jorge Roca, 2014. "Wage cyclicality: Evidence from Spain using social security data," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(2), pages 173-195, August.
    15. Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, vol. 13(5), pages 551-570, October.
    16. repec:diw:diwwpp:dp2068 is not listed on IDEAS
    17. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 879-900, October.
    18. John Creedy, 1994. "Statics and Dynamics of Income Distribution: An Introductory Survey," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(4), pages 51-71, October.
    19. repec:diw:diwwpp:dp2001 is not listed on IDEAS
    20. Sheldon Danziger & Markus Jäntti, 1999. "Income Poverty in Advanced Countries," LIS Working papers 193, LIS Cross-National Data Center in Luxembourg.
    21. Hope Bodenschatz & Gerald Eric Daniels Jr. & Jeffrey P. Thompson, 2023. "Decomposing Lifetime-Earnings Differences between White, Black, and Hispanic Families," Working Papers 23-14, Federal Reserve Bank of Boston.
    22. Moshe Justman & Hadas Stiassnie, 2021. "Inequality in Lifetime Earnings, 1986-2012," Working Papers 579, ECINEQ, Society for the Study of Economic Inequality.

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