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

Author

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  • Iacono Roberto

    (Faculty of Social and Educational Sciences, Norwegian University of Science and Technology (NTNU), Campus Tunga, NO-7491, Trondheim, Norway)

  • Palagi Elisa

    (Sant’Anna School of Advanced Studies, Institute of Economics and EMbeDS, Pisa, Italy)

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.

Suggested Citation

  • Iacono Roberto & Palagi Elisa, 2022. "Still the Lands of Equality? Heterogeneity of Income Composition in the Nordics, 1975–2016," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(2), pages 221-268, April.
    • Handle: RePEc:bpj:bejeap:v:22:y:2022:i:2:p:221-268:n:5
    DOI: 10.1515/bejeap-2021-0165
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    Citations

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    Cited by:

    1. Ranaldi, Marco, 2021. "Global Distributions of Capital and Labor Incomes: Capitalization of the Global Middle Class," SocArXiv 3g59r, Center for Open Science.
    2. Demetrio Guzzardi & Elisa Palagi & Tommaso Faccio & Andrea Roventini, 2023. "In search of lost time: An ensemble of policies to restore fiscal progressivity and address the climate challenge," LEM Papers Series 2023/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Ranaldi, Marco, 2024. "Compositional Inequality: Measurement, Stylized Facts, and Normative Aspects," SocArXiv 75ghp, Center for Open Science.
    4. Ranaldi, Marco & Milanović, Branko, 2022. "Capitalist systems and income inequality," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 20-32.
    5. Marco Ranaldi, 2022. "Income Composition Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 139-160, March.
    6. Petrova, Bilyana & Ranaldi, Marco, 2021. "Determinants of Income Composition Inequality," SocArXiv vyrz7, Center for Open Science.

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    More about this item

    Keywords

    income composition inequality; dual income taxation; Nordic countries;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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