From Ancient Empires to Amsterdam: A History of Inequality

A study published in Explorations in Economic History has found that the richest 1% received between about 10% and more than 40% of total income across a wide range of pre-industrial societies.

The findings show how strongly income could be concentrated among small elites, although the degree of concentration differed substantially between places and periods.

The study was written by Branko Milanovic of the Graduate Center at the City University of New York (CUNY).

It appeared in volume 93 of Explorations in Economic History in July 2024.

Historical Income Concentration

Using 53 social tables covering societies from ancient Greece in 330 BCE to Mexico in 1940, Milanovic estimated the income level and income share of the top 1%.

The results show that high inequality was not confined to one political system or period.

In some societies, including medieval Iraq and the Aztec Empire before the Spanish conquest, the top 1% received more than 40% of all income.

The paper’s title refers to the “bases of wealth” that supported elite status - such as land, merchant capital, citizenship and control of government - but its principal numerical comparisons concern income, not the distribution of personal net wealth.

The two concepts are related but not interchangeable: income is a flow received over time, while wealth is the stock of assets a person owns minus debts.

Comparative Analysis of Different Societies

The study compared income concentration across numerous societies and periods.

Some of its notable estimates include the following:

Pre-Industrial England

In England, the estimated income share of the top 1% was around 10% in 1290.

It rose markedly during the industrial era, exceeding 30% by 1867.

The comparison illustrates how the income share of elites could change as the structure of the economy changed.

Byzantine Empire

In the Byzantine Empire around the year 1000, the top 1% received an estimated 30.6% of total income, indicating a large gap between the economic elite and the rest of the population.

Colonial Kenya

In colonial Kenya during the late 1920s and 1930s, the top 1% received more than 30% of total income.

Much of the income at the top accrued to the small European settler population that dominated landownership and commercial activity.

Aztec Empire

The Aztec Empire immediately before the Spanish conquest displayed one of the highest levels of income concentration in the study.

The top 1% received more than 40% of total income, demonstrating that extreme inequality existed before European colonization.

Ancient Athens and Rome

In ancient Athens around 330 BCE, the top 1% received an estimated 16.7% of total income.

In the Roman Empire around 14 CE, the equivalent estimate was 16.1%.

These estimates show substantial income concentration even in early democratic and republican settings.

France and the United States

In France in 1788, immediately before the French Revolution, the top 1% received an estimated 16.8% of income.

In the United States between 1774 and 1870, the top 1% share was closer to 10%.

The study notes that societies with similar top shares could nevertheless have different levels of inequality among the remaining 99%.

Mexico and Russia

In Mexico, the estimated top 1% income share rose from 13.8% in 1895 to 21.4% in 1930, before standing at 20.4% in 1940.

In European Russia in 1904, the top 1% received an estimated 20.4% of total income.

Income and Wealth Inequality in Amsterdam and the Netherlands

Amsterdam offers a useful local comparison, although the surviving historical sources measure different things.

An estimate based on a special tax assessment from 1742 placed the city’s income Gini coefficient at 0.69, where zero represents complete equality and one represents complete inequality.

Nearly two-thirds of Amsterdam’s income at the time came from capital investment and entrepreneurship.

Golden Age prosperity was therefore accompanied by a highly unequal distribution of income, much of it generated by ownership of capital rather than wages.

Property records also reveal how wealth could become concentrated.

A study of Amsterdam’s eighteenth-century housing market found that when returns on safe government bonds fell, wealthy investors shifted money into real estate and other higher-yielding assets.

Their purchases contributed to a housing boom and increased inequality in housing wealth.

The evidence shows that inequality in the city was not only a matter of annual income: ownership of appreciating property was also unevenly distributed.

For the Netherlands as a whole, a long-run reconstruction of household wealth from 1854 to 2019 found a pronounced rise, fall and partial rebound in concentration.

The top 1% held roughly 55% to 60% of household wealth around the beginning of the twentieth century.

Its share fell to approximately 10% to 15% by the 1970s, then climbed again to around 30% to 35% in the early to mid-2010s.

The Dutch study links the exceptionally high level of private wealth before the Second World War partly to colonial and other foreign investments.

After the war, rapid income growth and broader asset ownership reduced concentration.

Since the 1980s, pension savings, capital gains and changing property values have reshaped the distribution again.

The authors caution that early wealth-tax data are incomplete and that their top-share series excludes pension wealth because its historical distribution cannot be reconstructed reliably.

Measuring Inequality

Milanovic uses several indicators, including the Gini coefficient and the Inequality Extraction Ratio (IER).

The Gini coefficient measures inequality across the entire distribution.

The IER compares observed inequality with the maximum inequality theoretically possible at that society’s average income, after allowing everyone else a subsistence income.

The measures do not always move together.

Two societies can give the top 1% a similar share of income while distributing the remaining income very differently among the other 99%.

Milanovic finds that once the top 1% share rises above roughly 25%, its relationship with both the Gini coefficient and the IER becomes stronger, but the 25% line is an analytical marker rather than a universal tipping point.

Implications for Modern Societies

The historical evidence shows that elite income concentration has appeared under very different economic and political systems.

It also shows why income and wealth need to be examined separately.

Amsterdam’s history, for example, combines extreme income inequality in the eighteenth century with evidence that wealthy investors could reinforce their position through ownership of housing and financial assets.

These comparisons cannot by themselves explain present-day inequality, but they help identify the assets and institutions that supported elite incomes in different societies.

Land, government office, merchant capital, colonial investments and real estate all provided routes to the top in particular historical settings.

Conclusion

The research demonstrates that the top 1% received a substantial - but widely varying - share of income across many pre-industrial societies.

The Dutch evidence adds a longer local perspective: Amsterdam’s commercial prosperity coexisted with severe income inequality, while national wealth became highly concentrated around 1900, declined sharply during the twentieth century and later began to rise again.

Taken together, the studies show that inequality is not a single statistic.

The concentration of income, property and total net wealth can follow different paths, depending on which assets generate economic power and who is able to own them.

Study Details

• Title: “How Rich Were the Rich? An Empirically-Based Taxonomy of Pre-Industrial Bases of Wealth”
• Author: Branko Milanovic
• Publication: Volume 93, July 2024
• Journal: Explorations in Economic History
• DOI: 10.1016/j.eeh.2024.101592