Working Paper: NBER ID: w18396
Authors: Peter H. Lindert; Jeffrey G. Williamson
Abstract: Building what we call social tables, this paper quantifies the level and inequality of American incomes from 1774 to 1860. In 1774 the American colonies had average incomes exceeding those of the Mother Country, even when slave households are included in the aggregate. Between 1774 and 1790, this income advantage over Britain was lost, due to the severe dislocation caused by the fight for Independence. Then between 1790 and 1860 US income per capita grew even faster than previous scholars have estimated. We also find that the South was initially much richer than the North on the eve of Revolution, but then suffered a severe reversal of fortune, so that by 1840 its white population was already poorer than free Northerners. In terms of inequality, our estimates suggest that American colonists had much more equal incomes than did households in England and Wales around 1774. Indeed, New England and the Middle Colonies appear to have been more egalitarian than anywhere else in the measureable world. Income inequality rose dramatically between 1774 and 1860, especially in the South.\n\nThe paper uses an open-source style, since our data processing is posted on http://gpih.ucdavis.edu (click on the folder "American incomes 1774-1870"). Detailed defense of the 1774 and 1800 benchmarks can be found in our previous NBER working paper (17211, July 2011), although the estimates reported here are revised. The 1860 estimates are completely new.
Keywords: American incomes; Inequality; Economic growth
JEL Codes: N11; N91; O47; O51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Revolutionary War (N41) | decline in income levels (E25) |
| colonial economic structure (F54) | American incomes in 1774 (N32) |
| South's wealth (P19) | lower income levels for white population by 1840 (N31) |
| income inequality (D31) | Gini coefficient increased from 0.437 in 1774 to 0.530 in 1860 (D31) |
| economic growth rate from 1800 to 1860 (N13) | revised estimates reflect a more dynamic economic experience (E01) |