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The Colonial Origins of Inequality: Exploring the Causes and Consequences of Land Distribution

  • E.H.P. Frankema

    ()

    (Groningen Growth and Development Centre, Faculty of Economics, University of Groningen)

Recent literature has pointed out that the historical distribution of assets is crucial in explaining the observed rigidity in post-war income inequality levels. This paper explores the causes and consequences of historical land distribution employing new and existing estimates of land inequality in cross-country OLS regressions. The two central questions addressed are 1) what explains the cross-country variation in land inequality at the end of the colonial period? 2) how does initial land inequality relate to current income inequality? It is shown that land distribution is determined by (colonial) institutions responding to relative factor endowments and natural geographic conditions as the disease environment and the feasibility to grow particular food- or cash-crops. Local conditions and institutional responses differed largely from region to region. Whereas the direct relation between initial land inequality and income inequality appears to be weak, controlling for (colonial) institutional variables reveals a strong relation between initial land inequality and current (1990’s) income inequality. High levels of income inequality, specifically in Sub Saharan Africa and Latin America, are shown to have fundamentally different colonial origins.

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File URL: http://www2.vwl.wiso.uni-goettingen.de/ibero/working_paper_neu/DB119.pdf
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Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 119.

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Length: 35 pages
Date of creation: 21 Oct 2005
Date of revision:
Handle: RePEc:got:iaidps:119
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  1. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  2. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
  3. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  4. Bourguignon, Francois & Verdier, Thierry, 2000. "Oligarchy, democracy, inequality and growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 285-313, August.
  5. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  6. Deininger, Klaus & Olinto, Pedro, 2000. "Asset distribution, inequality, and growth," Policy Research Working Paper Series 2375, The World Bank.
  7. John W. McArthur & Jeffrey D. Sachs, 2001. "Institutions and Geography: Comment on Acemoglu, Johnson and Robinson (2000)," NBER Working Papers 8114, National Bureau of Economic Research, Inc.
  8. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  9. Birdsall, Nancy & Londono, Juan Luis, 1997. "Asset Inequality Matters: An Assessment of the World Bank's Approach to Poverty Reduction," American Economic Review, American Economic Association, vol. 87(2), pages 32-37, May.
  10. Oded Galor & Omer Moav, 2005. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," 2005 Meeting Papers 24, Society for Economic Dynamics.
  11. Stanley L. Engerman & Kenneth L. Sokoloff, 2005. "Colonialism, Inequality, and Long-Run Paths of Development," NBER Working Papers 11057, National Bureau of Economic Research, Inc.
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