Daniel Waldenström

Lifting All Boats?

The Evolution of Income and Wealth Inequality

over the Path of Development

Does a rising tide lift all boats? This question – that is, to what extent does improvements of the general economy benefit all – is central to the study of economics and history. From fundamental issues about whether market forces have an innate tendency to increase or decrease differences in economic outcomes, to much debated questions about the effects of government policies, distributional concerns are always present.

In this dissertation, a novel dataset of international long-term income and wealth inequality data is presented and used to shed new light on long-standing issues in economic history. What were the distributional impacts of the industrial revolution? Who gains and who loses the most from the outbreak of a financial crisis? Has progressive taxation been a successful way to redistribute resources from the rich to the rest of the population?

Several important findings come out of the analyses presented. A general result is that whereas nineteenth century industrialization had a mixed impact on inequality across the Western world the twentieth century experience, including a rapid growth of government, educational reforms and the introduction of progressive taxation, uniformly equalized societies.