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

66 Pages Posted: 21 Dec 2020 Last revised: 19 Feb 2021

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)

Natalie Obergruber

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

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Date Written: December 2020

Abstract

What are the long-term economic effects of a more equal distribution of wealth? We exploit variation in historical inheritance rules for land traversing political, linguistic, geological, and religious borders 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.

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Suggested Citation

Bartels, Charlotte and Jäger, Simon and Obergruber, Natalie, Long-Term Effects of Equal Sharing: Evidence from Inheritance Rules for Land (December 2020). NBER Working Paper No. w28230, Available at SSRN: https://ssrn.com/abstract=3753140

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

Natalie Obergruber

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

Munich
Germany

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