“What Happened to the Rich during the Great Levelling? Evidence from Swedish Individual-level Data, 1909–1950”

Much of the overall income equalization during the first half of the twentieth century appears to have
been due to shifts in the shares of the incomes of the rich, such as the top 1 percent. But existing studies
using tabulated data has been restricted in its ability to account for the decline of top earners. In this
paper, we present the first evidence on the composition of the top groups from the Belle Epoque to the
early post-WW2 period. Using information on about 21,000 individual tax-payers in three elite areas
of Stockholm, we show that the absolute top (the richest 0.1 percent) was dominated by an economic
elite of CEOs and bankers, while a remarkably large fraction of the top 1 percent consisted of
professionals such as medical doctors and engineers. There was a distinction within the elite between
capital-rich “rentiers” and those affluent from wages and business income. The plunge in capital
incomes affected rentiers negatively, resulting in a fall in their share of the income elite. At the same
time, educational expansion brought down the human-capital advantage of white-collar professionals,
reflected in a drop in their relative incomes. The Swedish case illustrates the role of political decisions
in affecting the fortunes of the top, despite the country’s lack of involvement in the world wars.