In the US, more than half of the corresponding net reduction between 1940 and the 1970s took place before 1945, and three-quarters in Canada. In France, for example, fully 92% of the net decline in the top 1% income share from 1938 to the early 1980s had already occurred by 1945. 5.1, based on WID.Īlthough inequality often continued to fall for several decades after the end of the war, change unfolded much more rapidly during the actual war years. Even close bystanders such as Ireland, Portugal, Spain, Sweden, and Switzerland recorded contractions of elite income shares (Scheidel 2017: 132-4, based on WID).įigure 1 Top 1% income shares in four countries, 1935-1975 (% of income). Germany’s record is somewhat obscured by poor data but likewise fits this pattern. The US (at one-quarter of the pre-war share), the UK (at one-third) and France (at one-half) fell in between these extremes. National drops ranged from a modest 6% in New Zealand to a staggering two-thirds in Japan. Across a dozen countries that were directly involved in the war, the income share of the highest-earning 1% of households declined on average by close to one-third of the pre-war share. The evidence leaves no doubt about the intensity of this process (WID is the most important data repository, based on Atkinson and Piketty 2007, 2010 and more recent case studies). Truly widespread levelling occurred only in response to the unprecedented pressures and dislocations of WWII. The biggest shock of the interwar period was non-violent: in the US, the Great Depression reduced income and wealth inequality, first on its own and then thanks to the New Deal, but largely failed to have comparable effects elsewhere. It fell even more dramatically in Russia after the Bolshevik takeover (Scheidel 2018). The 20th century was no exception: mass mobilisation warfare that sometimes triggered radical revolution greatly narrowed the gap between elites and masses.ĭuring WWI and its immediate aftermath, inequality declined from national all-time highs in France, Germany, and the UK. Why? Throughout history, catastrophic shocks had repeatedly levelled economic disparities (Scheidel 2017). Over the following decades, this trend was dramatically reversed. This column is a lead commentary in the Vo圎U Debate " The Economics of the Second World War: Eighty Years On"īy the beginning of the 20th century, income and wealth inequality in many countries had reached new heights (Roine and Waldenström 2015, WID).
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