Inequality: the very long run
In Nature Branko Milanovic published an interesting article about (very) long run cycles in inequality, using among other metrics the wage-rent quotiënt as an indicator of inequality (wage income relative to income of landowners). See the first graph. I can actually add a little to this. I’ve extended the Dutch (Frisian) wage/rent series published earlier on this blog backward to 1697 and forward to 1862 (below). Up to about 1800, developments in Friesland and Spain seem to be pretty comparable. After 1800, however, population growth, increasing prices for Agricultural products in general and for livestock products in particular and (after 1813) soaring butter exports from Friesland to London caused Frisian land prices inrease relative to wages while they plummeted in Spain. As far as can be estimated, total factor productivity of agriculture did not increase in this period. Which indicates a fast increase in capital income in the Netherlands during this period (which is consistent with other sources). And which of course shows the detrimental consequences of wars, not just in the short run (in the Netherlands, the French period was less disastrous than in Spain, though 1812/1813 was abysmal). Returning to MIlanovic: in Knibbe, 2014, I show that after about 1900 incomes from land declined again due to lower agricultural prices and (after WW I) higher wages, which underscores his idea of very long inequality cycles. No links, as this function does not seem to work at this moment, I’ll try to insert them later, at this moment they are below the graph.