Working Paper: NBER ID: w19175
Authors: Hoyt Bleakley; Joseph P. Ferrie
Abstract: The state of Georgia allocated most of its land to the public through a system of lotteries. These episodes provide unusual opportunities to assess the long-term impact of large shocks to wealth, as winning was uncorrelated with individual characteristics and participation was nearly universal among the eligible population of adult white male Georgians. We use one of these episodes to examine the idea that the lower tail of the wealth distribution reflects in part a wealth-based poverty trap because of limited access to capital. Using wealth measured in the 1850 Census manuscripts, we follow up on a sample of men eligible to win in the 1832 Cherokee Land Lottery. We assess the impact of lottery winning on the distribution of wealth 18 years after the fact. Winners are on average richer (by an amount close to the median of 1850 wealth), but mainly due to a (net) shifting of mass from the middle to the upper tail of the wealth distribution. The lower tail is largely unaffected.
Keywords: Wealth Distribution; Poverty Trap; Land Lottery; Inequality
JEL Codes: D31; I38; J01; J24; J62; N31; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Winning the 1832 Cherokee land lottery (H27) | Increase in wealth (E21) |
| Winning the 1832 Cherokee land lottery (H27) | Exacerbation of wealth inequality (D31) |
| Winning the 1832 Cherokee land lottery (H27) | Concentration of wealth in upper tail of distribution (D30) |
| Winning the 1832 Cherokee land lottery (H27) | Minimal effects on the lower tail of wealth distribution (D39) |
| Winning the 1832 Cherokee land lottery (H27) | Higher Gini coefficient in treatment group (D31) |