Inheritance and Inequality in a Pre-Modern Economy

 

How do inheritance institutions affect wealth inequality in a pre-modern economy? Felix Schaff of the European University Institute and his co-author address this question by exploiting a sharp border between partible and impartible inheritance areas in southwest Germany, together with household-level data from the registers of the 1545 Turk Tax. They find that partible inheritance — the practice of dividing parents’ wealth at death equally among all offspring — substantially increased wealth inequality. This result reflects a three-part mechanism, working through the family, the land market, and the structure of the economy. First, partibility allows more poor people to marry and form households, because of the expectation under the European Marriage Pattern that married couples will support themselves independently. Under impartibility, by contrast, non-inheriting offspring remain unmarried or emigrate, reducing the number of poor households locally. Second, partibility fragments land, generating a large group of land-poor and landless households at the bottom and a re-concentration in the hands of large landowners at the top. Third, land fragmentation in partible areas induces people to undertake risky non-agricultural by-employments, increasing their vulnerability to economic shocks and their incentive to sell land to survive crises. In this Quantitative History webinar, Felix Schaff will explain how the seemingly egalitarian institution of partible inheritance can counterintuitively increase broader inequality in pre-modern context.