Inequality and growth in the very long run: inferring inequality from data on social groups

Jørgen Modalsli

Memo 11/2011

Memo (pdf)

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 coeffcients. 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.

Published June 20, 2014 1:57 PM - Last modified Jan. 24, 2019 11:44 AM