Top incomes during wars, communism and capitalism: Poland 1892-2015

This study presents the history of top incomes in Poland. We document a U-shaped evolution of top income shares from the end of the 19th century until today. The initial high level, during the period of Partitions, was due to the strong concentration of capital income at the top of the distribution. The long-run downward trend in top incomes was primarily induced by shocks to capital income, from destructions of world wars to changed political and ideological environment. The Great Depression, however, led to a rise in top shares as the richest were less adversely affected than the majority of population consisting of smallholding farmers. The introduction of communism abruptly reduced inequalities by eliminating private capital income and compressing earnings. Top incomes stagnated at low levels during the whole communist period. Yet, after the fall of communism, the Polish top incomes experienced a substantial and steady rise and today are at the level of more unequal European countries. While the initial upward adjustment during the transition in the 1990s was induced both by the rise of top labour and capital incomes, the strong rise of top income shares in 2000s was driven solely by the increase in top capital incomes, which make the dominant income source at the top. We relate these developments to processes associated with the new phase in globalisation.