"Top Incomes in the Long Run of History" with Tony Atkinson and

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54Journal of Economic Literature, Vol. XLIX (March 2011)4.03.5Sweden Finland NorwaySpain Portugal ItalyPareto-Lorenz coefficient3.02.52.01.51.01900190519101915192019251930193519401945195019551960196519701975198019851990199520002005Figure 14. Inverted-Pareto β Coefficients, Nordic and Southern Europe, 1900–2006Source: Atkinson and Piketty (2007, 2010).form the view that the initial conclusion ofPiketty and Saez (2003) was too strong. AsWolff and Zacharias rightly point out, whathappened is not so much that the “workingrich” have replaced “coupon-clipping rentiers”at the top of the economic ladder, butrather that “the two groups now appear toco-habitate the top end of the income distribution”(p. 108, their italics). Their studydemonstrates the importance of using abroader measure of the income from wealth.Data on the composition of top incomes areonly available for around half of the countriesstudied here but a number record the declineof capital incomes and the rise of top earnings.The Japanese data show that “the dramatic fallin income concentration at the top was primarilydue to the collapse of capital income duringthe Second World War” (Moriguchi andSaez 2008). In the Netherlands, “capital andwage incomes have traded places within thetop shares [although] the increased role of thelatter has not been able to prevent the declineor the stability of the top shares” (WiemerSalverda and Atkinson 2007). In Canada, “theincome composition pattern has changed significantlyfrom 1946 to 2000. . . . The shareof wage income has increased for all groups,and this increase is larger at the very top. . . .The share of capital income [excluding capitalgains] has fallen very significantly for the verytop groups” (Saez and Veall 2005). The Italiandata (Alvaredo 2010) only start in 1974 andthe rise in top shares is modest: the share ofthe top 1 percent rose from around 7 percentin the mid 1970s to around 9 percent in 2004.But the Italian data show a rise in the role ofwage income in the very top groups. In 1976,
Atkinson, Piketty, and Saez: Top Incomes in the Long Run of History554.03.5IndiaSingaporeArgentinaChinaPareto-Lorenz coefficient3.02.52.01.51.0192019251930193519401945195019551960196519701975198019851990199520002005Figure 15. Inverted-Pareto β Coefficients, Developing Countries: 1920–2005Source: Atkinson and Piketty (2007, 2010).wage earnings accounted for less than 10 percentof the income of the top 0.01 percent butby 2004 this had increased to over 20 percent.In Spain, a similar calculation (from figuresthat omit capital gains) shows that, in 1981,earnings accounted for less than 20 percentof the income of the top 0.01 percent but by2004 this had increased to 40 percent.At the same time, the picture is not totallyuniform. A major difference between theNordic countries and the United States isthe continuing importance in the formerof capital income. In Sweden, Roine andWaldenström (2008) find that “between1945 and 1978 the wage share at all levelsof top incomes became more important. . .. But in 2004 the pattern is back to that of1945 in terms of the importance of capital, inparticular when we include realized capitalgains.” The conclusions reached regardingFinland stress that “the main factor that hasdriven up the top 1 percent income share inFinland after the mid 1990s is an unprecedentedincrease in the fraction of capitalincome” (Jantti et al. 2010). This may reflectdifferences in reporting behavior followingtax reforms, but it is not totally a differencebetween Nordic countries and the Anglo-Saxons. In Australia, Atkinson and Leigh(2007a) found that “the proportion of salaryand wage income for top income groups in2000 was quite similar to the proportion in1980.” In the United Kingdom, it is true thatthe major themes have been the fall in capitalincomes over the first three-quarters of thetwentieth century and the subsequent rise intop earnings, but minor themes have beenan earlier fall on the share of top earners and
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