The 1990s rise in Swedish earnings inequality - persistent or transitory?

This article decomposes the rise in the cross-sectional variance of male annual earnings in Sweden between 1991 and 1999 into its persistent and transitory components. The results show that the persistent component accounts for basically all of the increase in earnings dispersion. This implies that the answer to the 1990s trend reversal in Swedish earnings inequality is to be found in explanations that focus on persistent changes in the labour market, such as changes in the price of skills.