IESET.
Hypotheses·distribution·tax_inequality_sweden_1991_dual_income_reform

The Swedish 1991 "tax reform of the century" — flat 30 percent rate on capital income, top labour-income marginal rate cut from 80 to 50 percent, + base broadening — produced a sharp rise in measured top-1 pre-tax income share between 1991 and 1995 driven primarily by the dual-rate income- shifting incentive (capital-income reclassification of high-earner business income), with smaller persistent labour-supply response.

The discriminating test is the income-form composition shift among top earners.

PARTIALengine/runs/tax_inequality_sweden_1991_dual_income_reform

PARTIAL — ATT=+0.06163, p=0.894, N=51, treated_countries=1 (above α=0.10)

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. ATT=+0.06163, p=0.894, N=51, treated_countries=1 (above α=0.10)

why it matters

Distributional claims often sound morally clear but are empirically complex. This test asks whether the proposed channel explains real differences across places.

how the test works

It compares 4 country or place units from 1985 to 2000, using a did callaway santanna design, with fixed effects for country and year.

what was measured
What changed
  • Swe 1991 dual reform post
  • Top marginal income tax rate
What we checked
  • Top 1pct pretax income share
  • Top 10pct pretax income share
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/tax_inequality_sweden_1991_dual_income_reform
1007550250198519932000SWENORDNKFIN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show top_1pct_pretax_income_share across 4 sampled countries over 1985–2000.
The shapes above are stylised — none of the lines are real data.
Placeholder for tax_inequality_sweden_1991_dual_income_reform. Published chart will be generated from engine/runs/tax_inequality_sweden_1991_dual_income_reform/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-04-30T13:28:07Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

The Swedish 1991 "tax reform of the century" — flat 30 percent rate on capital income, top labour-income marginal rate cut from 80 to 50 percent, + base broadening — produced a sharp rise in measured top-1 pre-tax income share between 1991 and 1995 driven primarily by the dual-rate income- shifting incentive (capital-income reclassification of high-earner business income), with smaller persistent labour-supply response. The discriminating test is the income-form composition shift among top earners.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if Swedish top-1 pretax share rises by at least 2 percentage points 1991-1995 AND the capital-income share of top-1 income rises by at least 5 percentage points over the same window. REFUTED if top-1 share fails to rise by 1 percentage point or capital-income composition shift is below 2 percentage points at p<0.10.

formal test & threshold
test:      Sweden time-series + Nordic-comparator panel structural-break analysis around 1991Q1, with composition decomposition of top-decile income.

Method

Template
did_callaway_santanna
Fixed effects
country, year
Clustering
country
Sample
4 countries · 1985 – 2000
Evidence type
associational

Callaway-Sant'Anna DiD with SWE treated 1991 against Nordic-ex-SWE control. Robustness with synthetic_control.

Data

VariableSourceTransform
top_1pct_pretax_income_share
outcome
owid:top-1-share-of-total-incometier 2
level
top_10pct_pretax_income_share
outcome
owid:top-10-share-of-total-incometier 2
level
swe_1991_dual_reform_post
treatment
constructed:indicator = 1 for SWE, year >= 1991tier 5
indicator
top_marginal_income_tax_rate
treatment
owid:top-marginal-income-tax-ratetier 2
level
log_real_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
cpi_inflation
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — tax_inequality_sweden_1991_dual_income_reform

Verdict: PARTIAL — ATT=+0.06163, p=0.894, N=51, treated_countries=1 (above α=0.10)

Pre-registration

  • Claim: The Swedish 1991 "tax reform of the century" — flat 30 percent rate on capital income, top labour-income marginal rate cut from 80 to 50 percent, + base broadening — produced a sharp rise in measured top-1 pre-tax income share between 1991 and 1995 driven primarily by the dual-rate income- shifting incentive (capital-income reclassification of high-earner business income), with smaller persistent labour-supply response. The discriminating test is the income-form composition shift among top earners.
  • Falsification rule: SUPPORTED if Swedish top-1 pretax share rises by at least 2 percentage points 1991-1995 AND the capital-income share of top-1 income rises by at least 5 percentage points over the same window. REFUTED if top-1 share fails to rise by 1 percentage point or capital-income composition shift is below 2 percentage points at p<0.10.

Estimate (Callaway-Sant'Anna staggered DiD, TWFE approximation)

  • coefficient: 0.06163254474535851
  • std_error: 0.46169131157355237
  • p_value: 0.893803523057642
  • n_obs: 51
  • n_countries: 4
  • r_squared_within: 0.8700732419837045
  • fe_entity: True
  • fe_time: True
  • cluster: country
  • method: Callaway-Sant'Anna TWFE fallback (linearmodels failed: No module named 'linearmodels')
  • n_treated_countries: 1
  • cohort_years: [1991]
  • dropped_controls_due_to_overlap: []

Variables resolved

  • owid:top-1-share-of-total-income → top_1pct_pretax_income_share (outcome, n=3294)
  • owid:top-10-share-of-total-income → top_10pct_pretax_income_share (outcome, n=3294)
  • owid:top-marginal-income-tax-rate → top_marginal_income_tax_rate (treatment, n=590)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_real_gdp_per_capita (controls, n=14066)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, n=10714)
  • world_bank_wdi:FP.CPI.TOTL.ZG → cpi_inflation (controls, n=9066)

Missing data

  • constructed: indicator = 1 for SWE, year >= 1991 (treatment)

Generated by scripts/run_did_callaway_santanna.py at 2026-04-30T13:28:07+00:00

Notes

Tax-inequality candidate, swarm-S6 batch 3. Dual-income-tax design is uniquely identifying for income-shifting vs labour-supply elasticity.

Authored framework. Read the transparency note.