Income Inequality in the Swedish City of Malmö - Evidence of The Great Leveling 1905-1950

Abstract: From the 1920s to the 1970s, a great leveling in incomes occurred throughout the industrialized world. However, our knowledge on the trends and causes of the great leveling are inconclusive, especially as research primarily has focused on the trends of the top 10 percent of income earners. By compiling a new micro dataset on the individual level from tax records for specific top and low-income districts in Malmö, the third-largest city in Sweden, this thesis explores income inequality trends, going beyond the narrow scope of observing the top 10 percent of income earners. The Malmö sample confirms previous findings of increasing inequality 1905-1920. The bottom 50 percent was hit hard by the price increases of World War I, while the top 10 were beneficiaries of this period’s developments. On the other hand, 1920-1950 was the total opposite to the previous period, as the real incomes rose substantially for the bottom 50 percent, especially female bottom income earners. Additionally, from 1935-1950, the top 10 percent in Malmö saw a collapse in their real incomes. The joint movement of rising bottom- and declining top-incomes reinforce previous findings of a great leveling in incomes, while the timing and accounting of the reduction indicates that both political - and market forces had equalizing tendencies.