Post-colonial Trends of Income Inequality: Evidence from the Overseas Departments of France

Most ex-colonies have gained their independence during the decolonization wave in the last century. Recent research on the colonial legacy in terms of inequality has thus mostly focused on these independent states, overlooking the territories which have been assimilated by their ex-colonizers. This paper analyzes the post-colonial inequality in four such territories-La Réunion, Guadeloupe, Martinique and Guyane. Drawing on a new income tax dataset put together in this paper, I study the evolution of income inequality in the four oldest French colonies, now overseas departments of France, since their decolonization in 1946 until recent years. The results of the top 1% income shares reveal a rapid decline of inequality since decolonization and stabilisation in the recent decade. Despite the general catch-up of the overseas departments, the top 10% income share remained consistently higher than in the metropolis. Going further, I investigate the underlying cleavage: the metropolitan-native divide. Matching recent fiscal data to the corresponding population census, I show that public-sector employment and metropolitans are over-represented at the top of the distribution and that there exist a "metropolitan income premium" in the overseas departments, even after controlling for observable characteristics.