Wealth-Income Ratios in a Small, Late-Industrializing, Welfare-State Economy: Sweden, 1810-2014

Abstract

This paper uses new data on Swedish wealth-income ratios over two hundred years in order to answer the question: Do the findings of Piketty and Zucman (2014) for very rich and large Western economies extend to small countries that were historically backward and that developed a different set of political and economic institutions during the twentieth century? The findings show on both similarities and differences. In the pre-industrial era up to the First World War, Sweden looks completely different than the rest of Europe, having wealth-income ratios that were about half of those in France and Britain. Over the twentieth century, aggregate trends and levels are much more similar, but the structure of national wealth differs. In Sweden, government wealth grew much faster and became more important than elsewhere and this also holds true for the public pension system, which suggests an explicit role of historical economic and political institutions for the long-run evolution of wealth-income ratios.