Until World War I wealth inequality in most industrialized economies was high. Then, in the next half century, it collapsed. In Paris, for instance, the share of wealth owned by the top 1% fell by half (from 70% to 35%). Although there has been significant variation in wealth concentration in developed economies since the end of World War II, in a historical perspective we have been living in a world of diminished inequality. In collaboration with Thomas Piketty and Gilles Postel-Vinay, I propose to investigate the collapse of wealth inequality by examining estate tax records from Paris in the period from 1912 to 1946. To do so the PI plans to collect detailed information of the composition of estates for individuals who died in Paris during the years 1912, 1922, 1927, 1932, 1937 and 1946. These years will provide access to one cross section before and one after each of the great shocks this era such as WWI, the Great Depression, and WWII). Intellectual merit of the proposed activity: Although there has been increasing recognition of the importance of the changes in inequality that occurred between 1914 and 1950, relatively little is known about how the process unfolded. These data will complement data sets we have already collected from 1807 to 1902 and will permit the compilation of homogeneous series on wealth concentration in Paris and France from 1807 to 1946 that complement published series that run from 1902 to 1984. The data offer detailed information on the identity of the decedents and on the nature of the wealth they left behind. This will permit a better understanding of why the very rich failed to maintain their relative position, and why the middle class started to accumulate assets at a much faster rate after rather than before WWI. Broader impacts resulting from the proposed activity: Understanding the decline in inequality that occurred during the first half of the twentieth century is important in its own right. More recently however, a number of economists have become interested in the consequences of the great shocks of the first half of the twentieth century on institutions. For some, these set back the development of private financial markets in those countries where the shocks were worst. Yet, to understand the political economy of institutional change, it is necessary to know exactly what kinds of people were affected by the shocks and how that may have changed their preferences for one set or another of institutions. On another level, we suspect that older cohorts had a much more difficult time overcoming the adverse consequences of the shocks than did younger ones. Beyond the lost generations on the battlefield, WWI and WWII may also have destroyed a generation of savers. As such, studying the first half of the twentieth century may provide some important clues at to the persistent effects of very large shocks and thus be of relevance to present day concerns. Indeed the impact on developing economies in Eastern Europe,Latin America, Africa and elsewhere of very large shocks that have had important effects on wealth accumulation can only be understood by turning to history.
