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Comparing Income and Wealth Inequality in Pre-Industrial economies. Lessons from Spain in the 18th century

Author

Listed:
  • Esteban Nicolini

    () (Economics Department, Universidad Carlos III de Madrid)

  • Fernando Ramos Palencia

    () (Department of Economics, Quantitative Methods and Economic History, Universidad Pablo de Olavide)

Abstract

Research on the history of inequality in pre-industrial economies has focused mainly on either wealth or income inequality. The most common problem with wealth inequality is the lack information about the bottom of the distribution while the main problem with income inequality is the lack of data to characterize the top of the distribution. Given that in general these approaches are based in different kinds of sources and methodologies, the results are not easy to compare and the links between the two distributions are difficult to establish. In this paper we use a unique data set for different regions of Spain circa 1750 and present results (the first for any pre-20th century economy) of inequality of both income and wealth for the same sample of households. Information of wealth comes from probate inventories while information of income comes from the Ensenada Cadastre. The main results of the paper are that poor households are not completely absent from our data set of inventories, that the position of a household in the distribution of income is closely associated to its position in the distribution of wealth and that an increase of a household’s wealth is associated to a less-than-proportional increase in the household’s income.

Suggested Citation

  • Esteban Nicolini & Fernando Ramos Palencia, 2016. "Comparing Income and Wealth Inequality in Pre-Industrial economies. Lessons from Spain in the 18th century," Working Papers 16.01, Universidad Pablo de Olavide, Department of Economics, Quantitative Methods and Economic History.
  • Handle: RePEc:pab:wphaei:16.01
    as

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    File URL: http://www.upo.es/serv/bib/wphaei/haei1601.pdf
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    References listed on IDEAS

    as
    1. Esteban A. Nicolini & Fernando Ramos Palencia, 2016. "Decomposing income inequality in a backward pre-industrial economy: Old Castile (Spain) in the middle of the eighteenth century," Economic History Review, Economic History Society, vol. 69(3), pages 747-772, August.
    2. Dobado González, Rafael & García Montero, Héctor, 2010. "Colonial Origins of Inequality in Hispanic America? Some Reflections Based on New Empirical Evidence," Revista de Historia Económica, Cambridge University Press, vol. 28(02), pages 253-277, September.
    3. Alfani, Guido, 2015. "Economic Inequality in Northwestern Italy: A Long-Term View (Fourteenth to Eighteenth Centuries)," The Journal of Economic History, Cambridge University Press, vol. 75(04), pages 1058-1096, December.
    4. Santiago-Caballero, Carlos, 2011. "Income inequality in central Spain, 1690-1800," Explorations in Economic History, Elsevier, vol. 48(1), pages 83-96, January.
    5. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
    6. Carlos Álvarez-Nogal & Leandro Prados De La Escosura, 2013. "The rise and fall of Spain (1270–1850)," Economic History Review, Economic History Society, vol. 66(1), pages 1-37, February.
    7. Lvarez-Nogal, Carlos & Prados De La Escosura, Leandro, 2007. "The decline of Spain (1500 1850): conjectural estimates," European Review of Economic History, Cambridge University Press, vol. 11(03), pages 319-366, December.
    8. François Bourguignon & Christian Morrisson, 2002. "Inequality Among World Citizens: 1820-1992," American Economic Review, American Economic Association, vol. 92(4), pages 727-744, September.
    9. Main, Gloria L., 1974. "Personal Wealth in Colonial America: Explorations in the Use of Probate Records from Maryland and Massachusetts, 1650 to 1720," The Journal of Economic History, Cambridge University Press, vol. 34(01), pages 289-293, March.
    10. Jørgen Modalsli, 2015. "Inequality in the very long run: inferring inequality from data on social groups," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 225-247, June.
    11. Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
    12. Wouter Ryckbosch, 2016. "Editor's choice Economic inequality and growth before the industrial revolution: the case of the Low Countries (fourteenth to nineteenth centuries)," European Review of Economic History, Oxford University Press, vol. 20(1), pages 1-22.
    13. Nicolini, Esteban A. & Ramos, Fernando, 2010. "A new method for estimating the money demand in pre-industrial economies: probate inventories and Spain in the eighteenth century," European Review of Economic History, Cambridge University Press, vol. 14(01), pages 145-177, April.
    14. Metin M. Cosgel & Bogac A. Ergene & Atabey Kaygun, 2013. "A temporal analysis of wealth in eighteenth-century Ottoman Kastamonu," Working papers 2013-03, University of Connecticut, Department of Economics, revised Mar 2013.
    15. la Force, J. Clayburn, 1964. "Royal Textile Factories in Spain, 1700–1800," The Journal of Economic History, Cambridge University Press, vol. 24(03), pages 337-363, September.
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    Citations

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    Cited by:

    1. Guido Alfani, 2017. "The rich in historical perspective: evidence for preindustrial Europe (ca. 1300–1800)," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(3), pages 321-348, September.
    2. Guido Alfani & Francesco Ammannati, 2014. "Economic inequality and poverty in the very long run: The case of the Florentine State," Working Papers 070, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    3. Santiago-Caballero, Carlos, 2012. "Explaining wheat yields in eighteenth-century Spain," IFCS - Working Papers in Economic History.WH wp12-05, Universidad Carlos III de Madrid. Instituto Figuerola.
    4. Guido Alfani & Wouter Ryckbosch, 2015. "Was there a ‘Little Convergence’ in inequality? Italy and the Low Countries compared, ca. 1500-1800," Working Papers 557, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. repec:spr:cliomt:v:11:y:2017:i:3:d:10.1007_s11698-016-0152-7 is not listed on IDEAS
    6. Fernández, Eva & Santiago Caballero, Carlos, 2018. "Economic inequality in Madrid, 1500-1840," IFCS - Working Papers in Economic History.WH 27072, Universidad Carlos III de Madrid. Instituto Figuerola.

    More about this item

    Keywords

    inequality; income; wealth; Spain; probate inventories; Ensenada Cadastre;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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