VERY LONG-TERM TRENDS IN ECONOMIC INEQUALITY: Evidence of concentration in European wealth over seven centuries
- 28 Mar 2017
In the last seven centuries of European history, there were only two periods during which the share of the top 10% by wealth declined: in the aftermath of the Black Death; and between the two world wars of the twentieth century. That is one of the findings of new research by Guido Alfani, to be presented at the Economic History Society’s 2017 annual conference.
His study analyses information about long-term trends in wealth inequality and the share of the top rich for many ancient Italian states as well as for other areas of Europe, from Catalonia to the Low Countries, for the period from 1300 to 1800. The research complements Thomas Piketty’s work on the share of wealth owned by Europe’s top rich in the nineteenth and twentieth centuries.
Alfani concludes that there is very solid ground to argue that the tendency for wealth to concentrate in a few hands in nineteenth century Europe was in fact only the final part of a much longer process, which started around 1450. On potential reversals of the long-term trends, he adds: ‘We can only hope that for the future, the tendency for inequality to grow can be contained without the occurrence of other large-scale catastrophes.’
The author explain the findings in more detail:
In the context of the renewed interest for long-term trends in economic inequality, particular attention has been paid to the share of the total income earned or wealth owned by the top of the distribution – usually the top 1, 5 or 10% individuals or households. The share of the top rich is both interesting per se (as it is informative of ‘how rich’ are the better-off), and as an indicator of the overall trends in economic inequality.
New time series of wealth concentration spanning the twentieth and at least part of the nineteenth century have recently been produced for a variety of countries by scholars such as Thomas Piketty. These works have increased considerably our knowledge of the time changes in wealth inequality and in the share of the top rich, adding to pre-existing studies covering only a few countries or areas, particularly Britain and the United States.
Even more recently, comparable data for the pre-industrial period has become available. To a significant degree, this is the result of the activities of the ERC-funded project EINITE – Economic Inequality across Italy and Europe, 1300-1800.
This project has collected, systematically and with a uniform methodology, information about long-term trends in wealth inequality and in the share of the top rich for many ancient Italian states as well as for a few other areas of Europe, from Catalonia to the Low Countries. These works, which whenever possible cover the entire period from 1300 to 1800, allow us to extend the series of the share of wealth owned by the top rich by about five centuries.
The available evidence suggests that overall, during the entirety of the early modern period, the rich tended to become both more prevalent and more distanced from the other strata of society. The only period during which the opposite process took place was the late Middle Ages, following the Black Death epidemic of the mid-fourteenth century.
For example, around 1500, in Italy the rich (defined as those households owning at least 10 times the wealth of the median household) were about 3-5% of the total population. By 1800, their prevalence had doubled. In the same span of time, the share of wealth held by the top 10% had grown from about 45-55% to about 70-80%.
The information for the late medieval and early modern periods puts in a somewhat different perspective recent findings about how the conditions of the rich have changed in the last two centuries. There seems, indeed, to be very solid ground to argue that the tendency for wealth to concentrate in a few hands in nineteenth century Europe was in fact only the final part of a much longer process, which had started around 1450.
In particular, the share of the top 10% that I reconstructed for 1800 seems to have approached the European average at 1810, which recently Piketty placed at slightly over 80%. Consequently, the time series in my research are relevant to current debates on very long-term changes in economic inequality and in the relative position of the rich.
In particular, in the last seven centuries of European history, apart from the aftermath of the Black Death, there is only one other period during which the share of the top rich declines: that comprised between the two world wars of the twentieth century. We can only hope that for the future, the tendency for inequality to grow can be contained without the occurrence of other large-scale catastrophes.
Associate professor in economic history, Bocconi University
Fellow of Dondena Centre and IGIER
Tel.: 0039 3332900066