Wealth-Income Ratios in Free Market Capitalism: Switzerland, 1900-2020

Abstract

We show that over the 20th century, in Switzerland the ratio of private wealth to national income, βpt, did not follow a U-shaped pattern, thereby contrasting the evolution in most European countries. Instead, the ratio was exceptionally stable at around 500%. We argue that this consistently high βpt was the result of geopolitical factors combined with Switzerland's capital friendly policy-making. Since the turn of the century, however, βpt has been on a rapid rise to reach 793% in 2020. This exceptionally fast increase is mainly driven by large capital gains, especially in housing wealth.