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

The colonial heritage of high land inequality in Latin American countries is still, after nearly two centuries of independence, one of the crucial underpinnings of its persistent high levels of income inequality. This paper assesses the colonial strategy of land redistribution in a global comparative perspective using new and existing land inequality figures in an OLS regression framework. The two central questions addressed are 1) what explains the cross-country variation in land inequality at the end of the colonial age? 2) how does initial land inequality relate to current income inequality? The main conclusions of the paper are that geography and factor endowments play a less decisive role than often argued in literature. And second, controlling for regional fixed effects, initial land inequality explains a substantial part of the present cross-country variation in current income inequality.