Monday, January 16, 2017

We find only two phases of significant inequality decline and both were triggered by catastrophic events

From The top rich in Europe in the long run of history (1300 to present day) by Guido Alfani. An examination of trend lines in income inequality in Europe back to 1300.
In the seven centuries recent research covers, across all the territories for which we have data, we find only two phases of significant inequality decline. Both were triggered by catastrophic events:
The Black Death, the most terrible epidemic in human history, affected Europe in 1347-51. Afterwards the richest 10% lost their grip on between 15% and 20% of overall wealth. This was a long-lasting decline in inequality. The richest 10% recovered their pre-Black Death quota only in the second half of the 17th century). This decline in the share of the top rich, as well as in overall inequality, was probably the consequence of two main factors. On one side of the distribution there was an increase in real wages of skilled and unskilled workers. We have evidence for this in many areas of Europe, as described in Pamuk (2007). This helped a larger proportion of the population to gain access to property. On the other side, large patrimonies fragmented due to a mortality crisis which was occurring in the presence of an unmitigated partible inheritance system (Alfani 2010 and 2015).

Shocks occurred between 1915 and 1945 related to the two World Wars, as argued by Piketty 2014, pp. 368-370). The share of wealth owned by the top rich has been growing again since around 1950, and reached 64% in 2010, but it is still far from the peak of 90% reached in 1910. The share of the richest 10% today is about the same as that in Europe (or at least, Italy) immediately before the Black Death.
Well, that's a drag. Not a finding that lends itself to any sort of popular public policy recommendation.

UPDATE: There is a new book out which apparently (I have not yet read it) makes the same argument: The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century by Walter Scheidel

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