Economic inequality in Germany, 1500–1800

From Firenze University Press Book: Economic inequality in pre-industrial societies: causes and effect

Ulrich Pfister, University of Münster

The chapter reviews existing evidence regarding four aspects of economic inequality: relative factor rents, which relate to the factorial distribution of income and also underlie the so-called Williamson index (y/wus), which is correlated with the Gini index of household income; real inequality in terms of opposite movements of the price of consumer baskets consumed by different strata of society; the inequality of pay according to gender and skill, as well as between town and countryside; and wealth inequality, particularly with respect to the access to land.

The main result is that, with given technology and agrarian institutions, there is a positive correlation between population and inequality. First, population growth increased wealth inequality via unequal inheritance among sibships and the resulting structural downward mobility. Consequently, by the second half of the eighteenth century landless and land-poor households constituted the majority of the population in many regions characterized by impartible inheritance. Second, given inelastic supply of fertile land, the land-labour ratio fluctuated inversely with population.

An increase of the land-labour ratio raises the marginal product of land and lowers the marginal product of labour. Thus, demographic expansion improved the relative income of land-owners and depressed the one of wage earners.

Third, and very tentatively, the effect of population growth on the relative income position of women and unskilled male labourers were aggravated by exclusionary strategies of craft guilds, particularly in the sixteenth century.

Finally, population growth causes the price of class-specific consumer baskets to move in opposite directions, which increases real inequality.

Through these four mechanisms, the massive increase in population between 1500 and 1800 raised inequality in the long run. Only the massive population losses in the wake of the Thirty Years’ War caused a temporary reversal of this long-term trend.

DOI: https://doi.org/10.36253/978–88–5518–053–5.20

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