Discussion Paper Details

Please find the details for DP11022 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Capital shares and income inequality: Evidence from the long run

Author(s): Erik Bengtsson and Daniel Waldenström

Publication Date: December 2015

Keyword(s): Inequality, Top incomes and Wage share

Programme Area(s): Economic History and Public Economics

Abstract: This paper investigates the relationship between the capital share in national income and personal income inequality over the long run. Using a new historical cross-country database on capital shares in 19 countries and data from the World Top Income Database, we find strong long-run links between the aggregate role of capital in the economy and the size distribution of income. Over time, this dependence varies; it was strong both before the Second World War and in the early interwar era, but has grown to its highest levels in the period since 1980. The correlation is particularly strong in Anglo-Saxon and Nordic countries, in the very top of the distribution and when we only consider top capital incomes. Replacing top income shares with a broader measure of inequality (Gini coefficient), the positive relationship remains but becomes somewhat weaker.

For full details and related downloads, please visit:

Bibliographic Reference

Bengtsson, E and Waldenström, D. 2015. 'Capital shares and income inequality: Evidence from the long run '. London, Centre for Economic Policy Research.