Wealth inequality in preindustrial England

by Guido Alfani (Bocconi University) and Hector García Montero (Public University of Navarre)

This blog is based on the authors’ article in the Economic History Review which has been published on early view: https://onlinelibrary.wiley.com/doi/10.1111/ehr.13158

Economic inequality has become a fundamental  issue in academic research, and a substantial problem affecting civil society.  Economic historians have played a key role in this field  because  long-term dynamics are central to debates on current levels of inequality.  Recent research has provided encompassing reconstructions of medieval and early modern inequality trends for many European areas.[1] England, however, has been relatively neglected, in sharp contrast to the voluminous research conducted on inequality  during the Industrial Revolution and the period immediately preceding it.

We seek to close this lacuna by using the exceptional fiscal sources available for England from the late thirteenth to the early sixteenth century.   However, these data suffer from specific limitations. The main weakness is the relatively high threshold for fiscal exemption, which means  the omission from the  records of  a large percentage of relatively poor households. To address this problem we developed a new method for reconstructing complete distributions from left-censored observations. This method, which could be fruitfully applied to other historical cases when a large part of the wealth or income distribution cannot be observed directly, allowed us to produce estimates of wealth inequality that are both more reliable and more comparable across time than those which could be obtained looking only at the partial distributions obtained directly from  historical sources.

We compiled a database of distributions of taxable household wealth across nineteen counties, plus London, focusing on the periods 1327-32, and 1524-25, together with a partial analysis for 1290-1309.  The results, represented by Gini indices, are shown in Figure 1.

Our analysis permits the following conclusions.  First, we detected an impressive stability across time in the relative position of the English counties: those that were the most unequal in the Middle Ages tended to be characterized also by high inequality in earlier periods. Second, in contrast to the rest of England, south and south-east counties became more inegalitarian over time.  This observation is consonant with earlier literature which reported a tendency for  southern counties to become relatively richer between the late Middle Ages and the eve of the Industrial Revolution,  because, across our database, we found a high positive correlation between inequality and average household wealth.

To develop our analysis, we produced estimates of wealth inequality for each of seven English macro-regions, and finally, for the whole of the country. We found that between 1327 and 1332, the Gini index of overall English wealth inequality was 0.725, growing to 0.756 by 1524-25. In the same period, the wealth share of the richest five per cent increased from 46 to 50 per cent (or from  22 to 25 percent  if we consider the richest one per cent).  These levels of wealth inequality are broadly comparable with other European countries, such as Italy and Germany.  For a modern comparison,  the share of wealth owned by the richest five and one per cent of U.K. households in 2020, is estimated at 43 and 23 per cent,  respectively – not very far, then, from Medieval levels (though the definitions of wealth in the two periods are quite different).[2] The overall distribution of wealth across English households is shown graphically in Figure 2.

A higher Gini index in 1524-25, compared to 1327-32, does not preclude a sharp decline in wealth inequality caused by the Black Death.  Indeed, based on similarities in the historical trends of key variables like real wages, we use the historical experience of other European countries to explain wealth inequality between our benchmark years.  Our reconstruction of wealth distribution throughout England permits an investigation of the growing distance in average wealth between North and South.  Using a Theil decomposition, we found that inequality between English macro-regions accounted for 4.5 per cent  of  overall inequality in 1327-32, but almost 38 per cent in 1524-25.  This provides a stark reminder that imbalances in average wealth (and income) currently affecting England have  considerable lineage. Indeed, our study provides an exemplary case of the interrelation between regional and national inequality; it shows how some regional divides which currently create the most unease can be traced back over centuries.  Such imbalances will  be  difficult to eradicate – a problem which will confront all Western countries.

To contact the authors:

Guido Alfani, guido.alfani@unibocconi.it

Hector García Montero, hector.garcia@unavarra.es

Notes:

[1] For a recent synthesis of this literature, Alfani, G., “Economic inequality in preindustrial times: Europe and beyond.” Journal of Economic Literature 59, no. 1 (2021): 3-44

[2]  Global Wealth Databook 2021, Research Institute of the Credit Suisse, p. 136.