Was the Burden of the Deep Swedish Recession Equally Shared?

Abstract

The development of income inequality in Sweden up to 1998 is described and analyzed using yearly data focusing on the 1990s when average income fell rapidly and unemployment sky rocketed. Inequality in equivalent disposable income increased during the 1990s as during most of the 1980s. Decomposing total inequality by population groups and studying the earnings of full–time workers shows that while many groups experienced drops in income during the 1990s, some large groups did not. Examples of the latter are pensioners and full–time workers. Young adults and recent immigrants are examples of the former. Decomposing the Gini–coefficient by income source indicates that forces leading to increased inequality during the 1990s differed from those at play during the 1980s.