Long-Run Changes in British Income Inequality

Abstract

T is difficult to measure the extent of improvement of various social and economic groups during the Industrial Revolution. There seems to be a growing body of evidence showing that lower-income segments shared in economic growth.' However, the idea still prevails that a dynamic industrial group developed in the eighteenth and nineteenth centuries which made the rich richer even if the poor did not become poorer. The consequence of such a movement would mean that relative inequality among all income groups would increase. This belief is often accepted in the United States because of the large body of literature dealing with the era of the robber baron. It is accepted by economists as being true for Germany mainly because of the study of annual income distributions available for the years from I873 to I9I3 and the one year 1854.2 There is a degree of silence about the British experience, even though incometax distributions exist for various income years3 since I 8o i. This stems from the fact that from I 803 to I 9 I o there were no comprehensive definitions of income. Distributions were available only for Schedule D income, that is, income from trade or business, the professions, and some miscellaneous items including small interest payments. The large amounts of property income, including interest and rents, were subject to separate flat rates so that any exact statements about income were difficult to make. It is the purpose ofthis paper to bring together available distributions before and after the Industrial Revolution in an attempt to make those data that are available more meaningful within the context of a long period of economic growth. This will involve the use of distributions for i962-3, I 8o I, I 688, and, brazenly, for I 436.