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Research Details

Income Dynamics in Sweden 1985-2016

Abstract

This paper analyzes earnings inequality and earnings dynamics in Sweden over 1985--2016. Using administrative data for the full population, we document steady and equal growth in real earnings across the entire distribution for men and women over more than 20 years since the mid-1990s. Earnings dynamics differ substantially by gender, education, and origin. Men face lower volatility than women, but their earnings growth is more closely tied to the business cycle. Earnings volatility is also systematically higher for highly educated workers but more left skewed for low educated workers. Earnings volatility is higher among the quickly increasing share of foreign-born workers. Their weaker labor market attachment counteracts overall trends of decreasing earnings volatility. We document an important role of social benefits usage for these overall trends and for differences across sub-populations. Higher benefits enrollment, especially for women and immigrants, is associated with higher earnings volatility. As the generosity of benefit programs declined over time, we find decreasing benefits usage and stronger earnings growth among low-income workers, consistent with higher self-sufficiency.

Type

Working Paper

Author(s)

Benjamin Friedrich, Costas Meghir, Lisa Laun

Date Published

2021

Citations

Friedrich, Benjamin, Costas Meghir, and Lisa Laun. 2021. Income Dynamics in Sweden 1985-2016.

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