Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 11/2011: Inequality and growth in the very long run: inferring inequality from data on social groups

Jørgen Modalsli ()
Additional contact information
Jørgen Modalsli: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: Income distribution data from before the Industrial Revolution usually comes in the shape of social tables: inventories of a range of social groups and their mean incomes. These are frequently reported without adjusting for within-group income dispersion, leading to a systematic downward bias in the reporting of pre industrial inequality. This paper suggests a correction method, and applies it to an existing collection of twenty-five social tables, from Rome in AD 1 to India in 1947. The corrections, using a variety of assumptions on within-group dispersion, lead to substantial increases in the Gini coefficients. Combining the inequality levels with data on GDP, a robust positive relationship between income inequality and economic growth is confirmed. This supports earlier proposals, based on fewer data points, of a "super Kuznets curve" of increasing inequality over the entire pre-industrial period.

Keywords: Pre-industrial inequality; social tables; Kuznets curve; history

JEL-codes: C65; D31; N30; O11

42 pages, April 28, 2011

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