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

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.