Long-Term Effects of Equal Sharing: Evidence from Inheritance Rules for Land

61 Pages Posted: 9 Sep 2020

See all articles by Charlotte Bartels

Charlotte Bartels

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel

Simon Jäger

Massachusetts Institute of Technology (MIT); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics; briq- Institute on Behavior & Inequality

Natalie Obergruber

CESifo (Center for Economic Studies and Ifo Institute) - ifo Center for the Economics of Education

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Abstract

What are the long-term economic effects of a more equal distribution of wealth? We exploit variation in historical inheritance rules for land in Germany. In some German areas, inherited land was to be shared or divided equally among children, while in others land was ruled to be indivisible. Using a geographic regression discontinuity design, we show that equal division of land led to a more equal distribution of land; other potential drivers of growth are smooth at the boundary and equal division areas were not historically more developed. Today, equal division areas feature higher average incomes and a right-shifted skill, income, and wealth distribution. Higher top incomes and top wealth in equal division areas coincide with higher education, and higher labor productivity. We show evidence consistent with the more even distribution of land leading to more innovative industrial by-employment during Germany's transition from an agrarian to an industrial economy and, in the long-run, more entrepreneurship.

Keywords: distribution, economic growth, economic development

JEL Classification: D3, O1, O4

Suggested Citation

Bartels, Charlotte and Jäger, Simon and Obergruber, Natalie, Long-Term Effects of Equal Sharing: Evidence from Inheritance Rules for Land. IZA Discussion Paper No. 13665, Available at SSRN: https://ssrn.com/abstract=3687142

Charlotte Bartels (Contact Author)

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel ( email )

DIW Berlin
Berlin, Berlin 14191
Germany

Simon Jäger

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

briq- Institute on Behavior & Inequality ( email )

Schaumburg-Lippe-Straße 5-9
Bonn, 53113
Germany

Natalie Obergruber

CESifo (Center for Economic Studies and Ifo Institute) - ifo Center for the Economics of Education ( email )

Munich
Germany

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