Proposal preview

Analyzing Inequality in the Past: New Data and Modern Approaches

In recent years a number of influential studies on the historical evolution of inequality and its causes have raised new interest on the topic. Is inequality expected to increase in the future or will we see Kuznets waves in the long run? Are economic or non-economic factors more important drivers of inequality? Do these drivers change over time? These vital questions can be approached using inequality estimates based on household budgets, social tables and top income shares which are being reconstructed by scholars for an increasing number of past societies. The present session brings together junior and senior scholars whose research relies on new data and modern approaches to provide novel insights on inequality in the past. Session participants will discuss implications of their latest findings for the global policy debate on inequality as well as promising avenues for future research.

Organizer(s)

  • Stefan Nikolić University of Groningen s.nikolic@rug.nl Netherlands
  • María Gómez-León University of Groningen maria.zmg@gmail.com Netherlands
  • Herman de Jong University of Groningen h.j.de.jong@rug.nl Netherlands

Session members

  • Eric Bengtsson, Lund University
  • Mats Olsson, Lund University
  • Giacomo Gabbuti, Oxford University
  • Sabrina Siniscalch, Universidad de la República, Uruguay
  • Henry Willebald, Universidad de la República, Uruguay
  • Filip Novokmet, Paris School of Economics
  • Stefan Nikolić, University of Groningen
  • María Gómez-León, University of Groningen
  • Herman de Jong, University of Groningen

Discussant(s)

  • Branko Milanović Graduate Center, CUNY bmilanovic@gc.cuny.edu

Papers

Panel abstract

In recent years a number of influential studies on the historical evolution of inequality and its causes have raised new interest on the topic. Is inequality expected to increase in the future or will we see Kuznets waves in the long run? Are economic or non-economic factors more important drivers of inequality? Do these drivers change over time? These vital questions can be approached using inequality estimates based on household budgets, social tables and top income shares which are being reconstructed by scholars for an increasing number of past societies. The present session brings together junior and senior scholars whose research relies on new data and modern approaches to provide novel insights on inequality in the past. Session participants will discuss implications of their latest findings for the global policy debate on inequality as well as promising avenues for future research.

1st half

Towards a study of determinants of pre-industrial inequality

Branko Milanović

Using the newly expanded set of 41 social tables from pre-modern societies, the paper tries to find out the factors associated with the level of inequality and the inequality extraction ratio (how close to the maximum inequality have the elites pushed the actual inequality). We find strong evidence that elites in colonies were more extractive, and that more densely populated and less urbanized countries exhibited lower extraction ratios. We propose several possibilities linking high population density to low inequality and to low elite extraction.

Using the newly expanded set of 41 social tables from pre-modern societies, the paper tries to find out the factors associated with the level of inequality and the inequality extraction ratio (how close to the maximum inequality have the elites pushed the actual inequality). We find strong evidence that elites in colonies were more extractive, and that more densely populated and less urbanized countries exhibited lower extraction ratios. We propose several possibilities linking high population density to low inequality and to low elite extraction.

Peasant Aristocrats? Inequality between Peasant Parliamentarians and their Voters in Sweden, 1769–1895

Erik Bengtsson and Mats Olsson

Sweden was unique in early modern Europe, in that its parliament included a peasant farmer estate. It is commonplace in Swedish and international research to consider the peasant farmer politicians as the guarantee of a liberal and egalitarian path of development. On the other hand, in the Swedish-language political history literature, the peasant politicians are often seen as rather narrow-minded, their common political program limited to the issue of keeping (their own) taxes as low as possible, and opposed to any expansion of social policy and citizenship rights. To address the issue of the role of peasant farmer politicians, this paper presents a novel dataset of the social and economic status of the peasant MPs, with benchmarks for the 1769, 1809, 1840, 1865 and 1895 parliaments. We show that the politicians on average were about three times wealthier than their voters, and in the 1895 parliament even nine times wealthier....

Sweden was unique in early modern Europe, in that its parliament included a peasant farmer estate. It is commonplace in Swedish and international research to consider the peasant farmer politicians as the guarantee of a liberal and egalitarian path of development. On the other hand, in the Swedish-language political history literature, the peasant politicians are often seen as rather narrow-minded, their common political program limited to the issue of keeping (their own) taxes as low as possible, and opposed to any expansion of social policy and citizenship rights. To address the issue of the role of peasant farmer politicians, this paper presents a novel dataset of the social and economic status of the peasant MPs, with benchmarks for the 1769, 1809, 1840, 1865 and 1895 parliaments. We show that the politicians on average were about three times wealthier than their voters, and in the 1895 parliament even nine times wealthier. They were more likely to take bourgeois surnames and their children were likely to make a transition away from the farmer class and into the middle class. The exclusiveness of the farmer politicians, which increased over the nineteenth century, has implications for their policies, and helps explain the increasing conservatism and right-ward drift of Swedish farmer politics over the century.

2nd half

Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015

Giacomo Gabbuti

The paper addresses theoretical and practical motivations for studying functional distribution in the past. Italy is adopted as a case study, in reason of the availability of long-run estimates on personal income inequality. The historical relevance of autonomous work, and the recent increase in labour shares, make the Italian historical experience of further general interest in understanding their long-term dynamics. New series from 1895 show Italian workers accruing a low share of national income until 1945. Functional distribution seems to have been the major driver of inequality in the first century after the unification of the country. By the end of the 1950s and the economic miracle, shares rapidly converged to the European average. Italian history shows that functional distribution deepens our understanding of long run distributional trends, as well as of key distributive episodes, and poses a compelling case for approaching income inequality by combining different sources and methodologies.

The paper addresses theoretical and practical motivations for studying functional distribution in the past. Italy is adopted as a case study, in reason of the availability of long-run estimates on personal income inequality. The historical relevance of autonomous work, and the recent increase in labour shares, make the Italian historical experience of further general interest in understanding their long-term dynamics. New series from 1895 show Italian workers accruing a low share of national income until 1945. Functional distribution seems to have been the major driver of inequality in the first century after the unification of the country. By the end of the 1950s and the economic miracle, shares rapidly converged to the European average. Italian history shows that functional distribution deepens our understanding of long run distributional trends, as well as of key distributive episodes, and poses a compelling case for approaching income inequality by combining different sources and methodologies.

Income distribution in Uruguay during the consolidation of the social welfare state (1908-1963)

Sabrina Siniscalchi and Henry Willebald

The paper discusses, on the one hand, the links and evolution among the factorial income distribution and the personal income distribution in Uruguay. On the other hand, we analyze the role of the welfare state on the inequality evolution. To achieve this, we develop new annual basis inequality dataset for Uruguay between 1908 and 1963 using dynamic social tables. We find a declining pattern in the inequality trend after the 1920s and, simultaneously, an increasing trajectory in the labor-shares. These evolutions happen in a historical context where improving redistribution was a specific objective of the state policy. These trends start to break its path after the exhaustion of the ISI model in the 1960s.

The paper discusses, on the one hand, the links and evolution among the factorial income distribution and the personal income distribution in Uruguay. On the other hand, we analyze the role of the welfare state on the inequality evolution. To achieve this, we develop new annual basis inequality dataset for Uruguay between 1908 and 1963 using dynamic social tables. We find a declining pattern in the inequality trend after the 1920s and, simultaneously, an increasing trajectory in the labor-shares. These evolutions happen in a historical context where improving redistribution was a specific objective of the state policy. These trends start to break its path after the exhaustion of the ISI model in the 1960s.

Income Inequality in Eastern Europe, 1900-1950

Stefan Nikolić and Filip Novokmet

Astonishingly little is known about historical income inequality in Eastern Europe. This paper provides the first annual estimates of income inequality within Bulgaria and Czechoslovakia during the first half of the twentieth century. Based on newly collected income, tax, and population data, we estimate inequality using both the social table and top incomes approaches. Estimates of inequality between social groups and top income shares lead to consistent conclusions. We find lower levels of inequality in Eastern Europe than in Western Europe. Variation in inequality over time supports the idea of inequality cycles.

Astonishingly little is known about historical income inequality in Eastern Europe. This paper provides the first annual estimates of income inequality within Bulgaria and Czechoslovakia during the first half of the twentieth century. Based on newly collected income, tax, and population data, we estimate inequality using both the social table and top incomes approaches. Estimates of inequality between social groups and top income shares lead to consistent conclusions. We find lower levels of inequality in Eastern Europe than in Western Europe. Variation in inequality over time supports the idea of inequality cycles.

Distribution dynamics in turbulent times: Income inequality in Germany and Britain, 1900-1950

María Gómez-León and Herman de Jong

In this paper we develop “dynamic” social tables for Germany and Britain and obtain annual direct estimates on inequality from 1900 to 1950. Using “dynamic” social tables, which have not been used for European countries before, we contribute (1) to filling an important gap by providing data on inequality in Germany and Britain on an annual basis for the first half of the twentieth century and (2) to shedding new light on the forces behind inequality changes within these two countries by exploring the whole range of the distribution. Evidence suggests that the drop of inequality during the twentieth century was neither steady nor equal across Europe. Indeed, inequality trends in these two countries tend to mirror each other. The fall of inequality in Germany is interrupted during the WWI I and the Nazi period, while in Britain the reversal occurred between the end of WWI and the Great Depression.

In this paper we develop “dynamic” social tables for Germany and Britain and obtain annual direct estimates on inequality from 1900 to 1950. Using “dynamic” social tables, which have not been used for European countries before, we contribute (1) to filling an important gap by providing data on inequality in Germany and Britain on an annual basis for the first half of the twentieth century and (2) to shedding new light on the forces behind inequality changes within these two countries by exploring the whole range of the distribution. Evidence suggests that the drop of inequality during the twentieth century was neither steady nor equal across Europe. Indeed, inequality trends in these two countries tend to mirror each other. The fall of inequality in Germany is interrupted during the WWI I and the Nazi period, while in Britain the reversal occurred between the end of WWI and the Great Depression.