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

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Abstract

This paper presents a new method for calculating Gini coefficients from tabulations of the mean income of social classes. Income distribution data from before the Industrial Revolution usually come in the form of such tabulations, called social tables. Inequality indices generated from social tables are frequently calculated without adjusting for within-group income dispersion, leading to a systematic downward bias in the reporting of pre-industrial inequality. The correction method presented in this paper is applied 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 suggests a positive relationship between income inequality and economic growth. This supports earlier proposals, based on fewer data points, of a “super Kuznets curve” of increasing inequality over the entire pre-industrial period.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 734.

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Date of creation: Feb 2013
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Handle: RePEc:ssb:dispap:734

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

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  1. Milanovic,Branko & Lindert, Peter H. & Williamson, Jeffrey G., 2007. "Measuring ancient inequality," Policy Research Working Paper Series 4412, The World Bank.
  2. Branko Milanovic, 2005. "An Estimate Of Average Income And Inequality In Byzantium Around Year 1000," Economic History 0501003, EconWPA.
  3. Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2008. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions and the Great Divergence," CEPR Discussion Papers 6751, C.E.P.R. Discussion Papers.
  4. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
  5. Yitzhaki, Shlomo & Lerman, Robert I, 1991. "Income Stratification and Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 313-29, September.
  6. François Bourguignon & Christian Morrisson, 2002. "Inequality Among World Citizens: 1820-1992," American Economic Review, American Economic Association, vol. 92(4), pages 727-744, September.
  7. Galor, Oded & Moav, Omer, 2001. "Das Human Kapital," CEPR Discussion Papers 2701, C.E.P.R. Discussion Papers.
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Cited by:
  1. Alwyn Young, 2011. "The Gini coefficient for a mixture of Ln-Normal populations," LSE Research Online Documents on Economics 54246, London School of Economics and Political Science, LSE Library.

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