Abstract
This article provides an overview of current knowledge about economic inequality, of both income and wealth, in the very long run of history focusing on Western Europe and North America. While most of the data provided by recent research cover the period from the late Middle Ages until today, some insights are also possible into even earlier epochs. Based on these recent findings, economic inequality seems to have been growing over centuries, with phases of clear and marked inequality reduction being relatively rare and usually associated with catastrophic events, such as the Black Death during the fifteenth century or the World Wars in the twentieth. Traditional explanations of long-term inequality growth are found to be unsatisfying, and a range of other possible causal factors are explored (demographic, social-economic, and institutional). Placing today’s situation in a very long-run perspective not only leads us to question old assumptions about the future of inequality (think of current criticism of Kuznets’s hypotheses) but also changes how we perceive inequality in the modern world.
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Notes
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I would like to thank Peter Lindert for many helpful comments.
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For example, in the city of Bergamo in the Republic of Venice, possibly the Italian community for which we have the most complete information about the prevalence of the propertyless over time, from 1537 to 1702, the distortion to the level of the Gini index varied from a minimum of 0.006 Gini points in 1640 (from 0.715 excluding the propertyless to 0.721 including them) to a maximum of 0.03 Gini points in 1610 (from 0.723 to 0.753) (Alfani and Di Tullio 2019).
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The estimate for Canada refers to the Ontario area only. Davis and Di Matteo 2018, p. 34.
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For example, there is archaeological proof that among the Chumash tribe living on the shores of California, the introduction of large oceangoing plank canoes able to venture relatively far from the coast, which occurred around 500–700 CE, led to the transition from an egalitarian society of foragers to one dominated by polygamous chiefs who controlled the canoes and organized economic, as well as military and religious activities (Scheidel 2017, pp. 34–35).
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Note that until now, the only European area for which we have evidence of a correlation between early modern economic stagnation and income inequality decline is Portugal (Reis 2017).
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Admittedly, Milanovic’s “optimism” only goes as far as hypothesizing that the current bout of inequality growth will one day peak, at a level lower than that reached in the early twentieth century due to the presence of “inequality stabilizers” like state pensions and unemployment benefits and will subsequently go down. That day, though, might be a long way off.
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The number of income “brackets” used by national personal income taxes has declined dramatically since 1975: in the case of the USA, for example, from 10 in 1975 to just 3 in 2000. Messere (2003), p. 23.
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Fiscal systems turned from being overall regressive and inequality enhancing to being progressive and inequality reducing at some point between the second half of the nineteenth century and the first decades of the twentieth. The exact timing is unclear because we lack specific studies of this fundamental transition.
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Alfani, G. (2019). Wealth and Income Inequality in the Long Run of History. In: Diebolt, C., Haupert, M. (eds) Handbook of Cliometrics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40458-0_29-1
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