Inequality in the (very) long-run: A new study

  • From Xhulia Likaj
  • Reading duration 2 min

In recent years, the discussion surrounding economic inequality has surged, with scholars and policymakers delving into the intricate tapestry of its long-term trends. The latest attempt in this regard was made by Guido Alfani, whose study meticulously traces income and wealth inequality from the 14th century to the contemporary era. Alfani's research, built upon earlier scholarship and bolstered by recent data, unveils a persistent inequality punctuated by few moments of levelling.

Throughout the centuries, two exceptions stand out amidst the tide of growing inequality: The aftermath of the Black Death in the 14th century and the period following World War I until the mid-20th century. These cataclysmic events, while devastating in their own right, brought temporary shifts in the distribution of wealth and income. Yet, as the author argues, the impact of such upheavals is deeply intertwined with the historical context. The political and institutional frameworks existing before these crises played a pivotal role in shaping their aftermath. Major epidemics and wars, whether they exacerbated or mitigated inequality, were profoundly influenced by prevailing social structures and policies. Taxation emerges as a central protagonist in the narrative of inequality. From regressive fiscal systems fueling continuous inequality growth in preindustrial times to the advent of progressive taxation during the 20th century, fiscal policies have shaped the contours of wealth distribution. The rise and fall of tax progressivity, from the time of World War I to the present, mirrors the very flow of the dynamics of inequality.

From the analysis one resounding truth emerges: inequality is not a natural inevitability but a consequence of human agency and institutional choices. The exceptional era of equalization in the 20th century, characterized by progressive fiscal policies and social reforms, is a proof of the potential for transformative change.

Read the full paper here.