Does capital income increase long-term inequality? The case of Sweden 1991-2017

Capital income is known to add to income inequality when measured on an annual basis, but the role of capital income in long-run inequality is rarely studied. We examine, using Swedish register data, the evolution of annual and long-term income inequality in Sweden 1991–2017, using disposable income with and without capital income. Capital income had a marginally equalizing effect on long-term inequality for the period 1991 to 2004 but added substantially to long-term inequality for the period 2004 to 2017. To properly understand the distributional effects of capital income, a long-term perspective is needed. JEL-codes: D31, D63, E22