Tordesillas, Slavery and the Origins of Brazilian Inequality

This article documents the long-term impact of slavery on inequality at the receiving end. We focus on Brazil, the largest importer of African slaves and the last country to abolish this institution in the Western Hemisphere in 1888. To deal with the endogeneity of slavery placement, we use a spatial Regression Discontinuity Design (RDD) exploiting the Tordesillas Treaty, which established the colonial boundaries between the Portuguese and Spanish empires within modern-day Brazil. We find that the density of slaves in 1872 is discontinuously higher by 3% on the Portuguese side of the border, consistent with this power’s comparative advantage in transatlantic slavery. We then show how this differential slave rate led to higher income inequality in modern times by 0.04 points of the Gini index, or 8% of the national average. In terms of mechanisms, we find a wider racial income gap, as well as important differences in education, employment and prejudice against blacks in modern times, as well as structural transformation and foreign immigration during intermediate historical times.