Income and Wealth Concentration in Switzerland over the Twentieth Century

Abstract

Abstract The evolution of income and wealth inequality during the process of development has attracted enormous attention in the economics literature. Liberals have blamed income and wealth concentration because of concerns for equity and in particular for tilting the political process in the favour of the wealthy. They have proposed progressive taxation as an appropriate counter-force against wealth concentration. For conservatives, concentration of income and wealth is considered as a natural and necessary outcome of an environment that provides incentives for work, entrepreneurship, and wealth accumulation, key elements of macro-economic success. Progressive taxation may redistribute resources away from the rich and wealthy and reduce wealth concentration but it might also weaken those incentives and generate large eYciency costs.