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Inequality and Economic History
Guido Alfani
DONDENA Centre for Research on Social Dynamics
Bocconi University, Milan, Italy
12 October 2017
EINITE – ERC Starting Grant
• Up until recently, we had very little information about long-term trends in economic inequality in preindustrial Europe. The notable exception was Van Zanden (1995) on Holland in the Low Countries
• The situation has now changed entirely, and for many European regions we now have time series of (mostly wealth) inequality covering the early modern period and part of the Middle Ages
• Most of the new data which has become available is the result of a project funded by the ERC (Starting Research Grant program): EINITE – Economic Inequality across Italy and Europe, 1300-1800 (www.dondena.unibocconi.it/EINITE)
• Including the preindustrial period in the analysis tends to change the way in which we look at recent developments in inequality
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The story so far
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The areas covered by EINITE: Italy…
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…the Low Countries…
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…and other European areas, in particular south France, Catalonia, Germany and England
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The (more or less) common archival sources used: the estimi or property tax records
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The case of Piedmont (wealth inequality, Gini indexes. Propertyless excluded)
0,3
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1
1300 1350 1400 1450 1500 1550 1600 1650 1700 1750 1800
Carmagnola Cherasco Chieri
Moncalieri Ivrea Saluzzo
Source: Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 2015
12 October 2017
Share of wealth of the top 10% (Piedmont)
0102030405060708090
1300 1350 1400 1450 1500 1550 1600 1650 1700 1750 1800Carmagnola Cherasco Chieri
Moncalieri Ivrea Saluzzo
Source: Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 2015
12 October 2017
A new method to aggregate local time series in order to produce «regional» time series
Source: Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 2015
0,3
0,4
0,5
0,6
0,7
0,8
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1
1300 1350 1400 1450 1500 1550 1600 1650 1700 1750 1800
Piedmont Cities Rural areas
00,10,20,30,40,50,60,70,80,9
1
1300 1350 1400 1450 1500 1550 1600 1650 1700 1750 1800
Castelfiorentino Poggibonsi
St. Godenzo St. Maria Impruneta
Contado of Florence Contado of St. Gimignano
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Economic inequality in the Florentine contado, 1300-1800 (wealth inequality, Gini indexes)
Estimo Catasto Decima
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The impact of the Black Death in Tuscany: Lorenz Curves
Source: Alfani and Ammannati, “Long-term trends in economic inequality: the case of the Florentine State, ca. 1300-1800”, Economic History Review, 2017
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The Tuscan regional reconstruction
00.10.20.30.40.50.60.70.80.9
1
1450 1500 1550 1600 1650 1700 1750 1800
Cities Tuscany Rural areas
Source: Alfani and Ryckbosch, “Growing apart in early modern Europe? A comparison of inequality trends in Italy and the Low Countries, 1500–1800”, Explorations in Economic History, 2016
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Findings from regression analysis (on Tuscany) (1) (2) (3) (4) (5) (6)
Year 0.0007***
(0.0001)
0.0007***
(0.0001)
0.0008***
(0.0001)
0.0008***
(0.0001)
0.0008***
(0.0001)
0.0008***
(0.0001)
Pre-Black Death 0.1089***
(0.0288)
0.1211***
(0.0309)
0.1215***
(0.0309)
0.1303***
(0.0307)
Population (ln) 0.0446***
(0.0068)
0.0465***
(0.0066)
0.0076
(0.0120)
0.0025
(0.0209)
-0.0008
(0.0124)
-0.0157
(0.0228)
Per capita GDP (ln) 0.1431
(0.0902)
0.1750**
(0.0869)
0.1637*
(0.0919)
0.1807*
(0.0913)
0.1761*
(0.0993)
Urban
(ref.: Rural)
0.0884***
(0.0280)
0.0869***
(0.0307)
Estimo
(ref.: Decima)
0.0172
(0.0216)
0.0228
(0.0235)
0.0325
(0.0279)
0.0358
(0.0285)
Catasto
(ref.: Decima)
-0.0243
(0.0205)
-0.0226
(0.0230)
-0.0197
(0.0224)
-0.0235
(0.0249)
Fixed effects
(community dummies)
Yes Yes
F 123.5*** 90.55*** 49.53*** 24.24*** 31.41*** 13.85***
R² 0.6597 0.6674 0.7030 0.7405 0.6490 0.6919
N 130 130 130 130 115 115
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The Republic of Venice
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Economic inequality across the Republic of Venice as a whole (wealth inequality, Gini indexes. Propertyless excluded)
Aggregate series elaborated with the same method introduced in G. Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 2015
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1400 1450 1500 1550 1600 1650 1700 1750
Cities Rural areas Venetian Republic
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Long-term trends in economic inequality (Gini indexes of wealth concentration, including and excluding the propertyless)
0.64
0.66
0.68
0.7
0.72
0.74
0.76
0.78
0.8
0.82
0.84
0.86
1537 1552 1567 1582 1597 1612 1627 1642 1657 1672 1687 1702
Padua Padua (with propertyless)
Bergamo Bergamo (with propertyless)
For the rural areas: in Padua’s contado, where the propertyless were recorded in 1642 and 1694 only, adding them to the distribution increases the Gini index by 1.1% (from 0.728 to 0.736) and by 2.5% (from 0.747 to 0.766) respectively
12 October 2017
Economic inequality across the Republic of Venice as a whole (Gini indexes of wealth concentration)
Aggregate series elaborated with the same method introduced in G. Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 2015
0,3
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0,5
0,6
0,7
0,8
0,9
1500 1550 1600 1650 1700 1750Rural areas (propertyless included)Venetian Republic (propertyless included)Venetian RepublicRural areas
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Comparing regional trends in Italy: Republic of Venice, Sabaudian State, Kingdom of Naples and Florentine state (for now!)
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1
1450 1500 1550 1600 1650 1700 1750 1800
Sabaudian State Kingdom of Naples (Apulia)
Florentine State Republic of Venice
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Taking the comparison beyond Italy: the Low Countries
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Regional trends in inequality (Gini)
Source: Alfani and Ryckbosch, “Growing apart in early modern Europe? A comparison of inequality trends in Italy and the Low Countries, 1500–1800”, Explorations in Economic History, 2016
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1500 1550 1600 1650 1700 1750 1800
Piedmont Tuscany
Northern Low Countries Southern Low Countries
• Across four different States, on both sides of the Little Divergence, we find empirically a broadly similar path of increase in economic inequality throughout the Early Modern period
• As it seems, no single causal factor can explain all four cases (plus Apulia and Veneto) for the whole period: this means there was no «necessary» condition to have inequality increase, but possibly a range of «sufficient» conditions. We are considering the following: – Economic growth – Demographic factors (urbanization) – Proletarianization – Institutions and politics (extraction of inequality)
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Possible explanations
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GDP per capita
Source: Maddison Project (2014)
0
500
1000
1500
2000
2500
3000
1500 1600 1700 1750 1800
central-northern Italy southern Low Countries
northern Low Countries
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Politics, institutions, & inequality extraction
P2 H2
IPF
GDP per capita
Gini
E2' E1
P1, H1
E2''
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Extraction of inequality: the northern Low Countries…
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… and Tuscany
Converted Gini coefficients (1550 = 76% extraction ratio, as in Northern Low Countries)
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All cases
Converted Gini coefficients (1550 = 76% extraction ratio)
Tuscany Piedmont
northern L.C.
southern L.C.
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Extraction ratios
Converted extraction ratios: 1550 = 76%
70
75
80
85
90
95
100
1500 1550 1600 1650 1700 1750 1800
Northern LC Southern LC Tuscany Piedmont
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Increasing extraction and the rise of the fiscal state in Europe
-3
2
7
12
17
22
0
5
10
15
20
25
30
35
1500
1530
1560
1590
1620
1650
1680
1710
1740
1770
1800
Lire
per c
apita
(onl
y fo
r Sab
audi
an S
tate
)
Num
ber o
f dai
ly w
ages
of l
abou
rers
in c
onst
ruct
ion
indu
stry
Holland Flanders State of Milan Sabaudian State
Increase in per-capita fiscal burden, ca. 1500-1800
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Politics and institutions
• The fact that although inequality grew everywhere, trends in inequality extraction ratios differed deeply suggests to pay particular attention to political and institutional factors.
• The rise of the fiscal-military state: - Growth of regressive fiscal pressure
Relative exception: Dutch Republic - Inegalitarian Redistribution through interest payments & warfare
And in the opposite direction: poor relief (2016 article by Van Bavel and Rijma, suggesting differences in levels of “social spending” across preindustrial Europe)
• Processes of “proletarianization”
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The share of the top 10%
0102030405060708090
1300 1350 1400 1450 1500 1550 1600 1650 1700 1750 1800Sabaudian State Sabaudian State (cities only)
Florentine State Kingdom of Naples (Apulia)
Southern Low Countries (cities only) Northern Low Countries
In Italy, where the figures refer to wealth (in the Low Countries they refer to income), for 1800 we found shares of the top 10% very close to those proposed by Piketty (2014) for Europe in 1810: about 80%
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Connecting to the present: the share of wealth of the top 10% in Europe, 1300-today
Source: Alfani, The top rich in Europe in the long run of history, Vox, 15 January 2017
30%
40%
50%
60%
70%
80%
90%
100%13
00
1350
1400
1450
1500
1550
1600
1650
1700
1750
1800
1850
1900
1950
2000
series Alfani series Piketty
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Key references • G. Alfani, The top rich in Europe in the long run of history, Vox, 15 January 2017 • G. Alfani, “Economic inequality in northwestern Italy: A long-term view (fourteenth to
eighteenth centuries)”, Journal of Economic History, 2015 • G. Alfani, “The rich in historical perspective. Evidence for preindustrial Europe (ca. 1300-
1800)”, Cliometrica, 11(3), 2017 • G. Alfani and F. Ammannati, “Long-term trends in economic inequality: the case of the
Florentine State, ca. 1300-1800”, Economic History Review, 2017 • G. Alfani and W. Ryckbosch, “Growing apart in early modern Europe? A comparison of
inequality trends in Italy and the Low Countries, 1500–1800”, Explorations in Economic History, 2016
• B. Milanovic, Global Inequality: a new approach for the age of globalization, Harvard University Press, Cambridge 2016
• B. Milanovic, P. Lindert, J.H. Williamson, (2011), “Pre-Industrial Inequality”, The Economic Journal, 2011
• T. Piketty, Capital in the Twenty-First Century, Belknap Press of Harvard University Press, Cambridge 2014
• W. Scheidel, The Great Leveller: Violence and the Global History of Inequality from the Stone Age to the Present, Oxford University Press, Oxford 2017
• G. L. Van Zanden, “Tracing the beginning of the Kuznets curve: western Europe during the early modern period”, Economic History Review, 1995
12 October 2017
Thanks for your attention!