Peter H. Lindert

Three Centuries of Inequality in Britain and America

Income and wealth inequality rose over the first 150 years of U.S. history. They may have risen at times in Britain before 1875. The first half of this century equalized pre-fisc incomes more in Britain than in America. From the 1970s to the 1990s inequality rose in both countries, reversing some of the previous equalization. Government redistribution explains part but not all of the reversals in inequality trends. Factor-market forces and economic growth would have produced a similar chronology of rises and falls in income inequality even without shifts in the progressivity of redistribution through government. For economies starting from highly unequal property ownership, the development process lowers inequality. History suggests, however, that this may happen only once. Redistribution toward the poor tends to happen least in those times and polities where it would seem most justified by the usual goals of welfare policy.

Revising England's social tables 1688–1812☆

What are we to do with those tempting but treacherous social tables drawn up by Gregory King for 1688, Joseph Massie for 1759, and Patrick Colquhoun for 1801-1803 and 1812 ?’ They offer unique quantitative views of social structure and income distribution during a statistical Dark Age. Furthermore, each of these observers had socioeconomic information about his time that has not survived. Yet precocious guesses for political consumption must always be distrusted and these social arithmeticians certainly had axes to grind. King produced figures that warned against “the Vanity of People in overvaluing their own Strength . . . That . . . has influenced all former Calculations of this Kind both at Home and Abroad,” and dramatized negative national saving during the war against France.* Massie entitled his social

Growth, equality, and history☆

Abstract Complex policy issues deserve frequent reassessment, and the relationship between economic growth and equality is undeniably complex. Policymakers who care about trade-offs between the two goals continue to press the scientific limits of empirical economics. It takes an enormous sample of long-term national experiences to approximate the data base necessary to move debate from allegation to evidence. Fortunately, the sample continues to expand. Since the 1950s dozens of countries have produced evidence on income distribution and growth, and the records of some currently developed countries have been extended back into the 17th century. This article assesses the empirical harvest. Most of our inferences, however, are based on American and British history.

Pre‐Industrial Inequality

Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes as unequal as they are today? This article infers inequality across individuals within each of the 28 pre-industrial societies, for which data were available, using what are known as social tables. It applies two new concepts: the inequality possibility frontier and the inequality extraction ratio. They compare the observed income inequality to the maximum feasible inequality that, at a given level of income, might have been extracted by those in power. The results give new insights into the connection between inequality and economic development in the very long run.

Pressure groups and redistribution

Abstract The simple pressure group model of political redistribution can predict more with less restrictive assumptions. Instead of ready-made pressure groups composed of individuals who vote their pocketbooks, we posit heterogeneous agents each of whom decides which group to join and how much effort to expend on political activity. Our model then examines ‘social affinity’ conditions that foster pressure group formation. Political sympathies based on social affinity imply testable effects of growth rate and income distribution on progressive transfers, effects that prove substantial in pooled time-series cross-section regressions for 13 OECD countries, 1960–1981.

Unequal English Wealth since 1670

New data on probated wealth, landownership, debts, and occupations extend our view of the distribution of English wealth back from 1911 to 1670. There were widening gaps in mean wealth between the top landed-plus-merchant classes and the middle classes across the Industrial Revolution century. Size distributions for individual assets also widened. So did those for income or total wealth (including human). But nonhuman net worth did not become more unequal because of important shifts in the land share. All inequality measures before 1914 exceeded all those since 1950. The estimates illuminate classical theories of distribution.

SIBLING POSITION AND ACHIEVEMENT

Past studies linking schooling and career attainment to sibling position (family size, birth order, spacing) are vulnerable to suspicions about omitted variables: being based on cross-sections of individuals from different families, they may have attributed to sibling position an influence belonging to unobserved parental attributes. This study retests the link between sibling position and achievement, using a cross-section of intrafamily sibling differences. The alleged link is confirmed. Further, its pattern is very consistent with the view that sibling position matters because of its straightforward effects on family time and commodity inputs into children.

Real Inequality in Europe since 1500

Introducing a concept of real, as opposed to nominal, inequality of income or wealth suggests some historical reinterpretations, buttressed by a closer look at consumption by the rich. The purchasing powers of different income classes depend on how relative prices move. Relative prices affected real inequality more strongly in earlier centuries than in the twentieth. Between 1500 and about 1800, staple food and fuels became dearer, while luxury goods, especially servants, became cheaper, greatly widening the inequality of lifestyles. Peace, industrialization, and globalization reversed this inegalitarian price effect in the nineteenth century, at least for England.

The International Debt Crisis in Historical Perspective

This anatomy of financial crises shows that the worldwide debt crisis of the 1980s was not unprecedented and was even forecast by many. Eichengreen and Lindert bring together original studies that assess the historical record to see what lessons can be learned for resolving todays crisis.

Why the Welfare State Looks Like a Free Lunch

The econometric consensus on the effects of social spending confirms a puzzle we confront in the raw data: There is no clear net GDP cost of high tax-based social spending on GDP, despite a tradition of assuming that such costs are large. This paper offers five keys to this free lunch puzzle. First, it shows conventional analysis imagines costly forms of the welfare state that no welfare states have ever practiced. Second, better tests confirm that the usual tales imagine costs that would be felt only if policy had strayed out of sample, away from any actual historical experience. Third, the tax strategies of high-budget welfare states are more pro-growth and less progressive than has been realized, and more so than in free-market OECD countries. Fourth, the work disincentives of social transfers are so designed as to shield GDP from much reduction if any. Finally, we return to some positive growth and well-being benefits of the high welfare budgets, and then pose theoretical reasons why democracy may exert a crude form of cost control.