Does Industrialisation Push up Inequality? New Evidence on the Kuznets Curve from Nineteenth-Century Prussian Tax Statistics

This paper presents new estimates of income inequality derived from Prussian tax statistics for the years 1822-1914. Confidence intervals are also calculated. The results show a rise in inequality in the nineteenth century, with a peak around 1906, thus supporting the view put forward by Simon Kuznets that industrialisation will initially lead to a rise in inequality. The paper goes on to consider whether this was due to factors which were particular to Germany in the period, or whether the Kuznets curve is the result of forces which affect all industrialising societies. The conclusion reached is that the Kuznets curve is an avoidable trap, not an automatic consequence of industrialisation.