Intergenerational mobility in the very long run: Florence 1427–2011
What is this research about and why did you do it?
Equality of opportunity is a key aspect of the broader concept of equality of citizenship. In principle, if all newborns started from the same starting block, their socio-economic status as adults should not depend on their family background. Unfortunately, this is not the case. In the case of earnings, for example, the intergenerational elasticity, i.e. the correlation between a father's status and a son's adult status (the higher the elasticity, the lower the mobility), ranges broadly from less than 0.2 in the Scandinavian countries to almost 0.5 in Italy, the UK and the US. This is important because societies characterised by high intergenerational transmission of socio-economic status are not only more unfair but may also be less efficient, wasting the skills of those from disadvantaged backgrounds. As a partial consolation, scholars have shared the view that the economic advantages and disadvantages of ancestors disappear within a few 2-3 generations. In our research, we challenge this view and investigate whether the persistence of income and wealth can persist across centuries.
How did you answer this question?
We focused on the Italian city of Florence, for which data on taxpayers in 1427 – including surnames, occupations, earnings, and wealth – have been digitalized and made available online, and matched these data with those taken from the tax records relating to the city of Florence in 2011. Family dynasties are identified by surnames. We use a two-step approach. First, we use the sample of ancestors and regress the log of earnings on surname dummies (and on age and gender); second, we observe the taxpayers present in the 2011 Florence tax records and regress the log of their earnings on that of their ancestors, as predicted by the coefficient of the surname dummies estimated in the first step. The corresponding coefficient is the estimate of the long-run intergenerational elasticity. The same strategy was repeated using the log of real wealth instead of the log of earnings as the dependent variable. In more colloquial language, we test whether earnings/wealth in 2011 are somehow correlated with average earnings/wealth at the surname level in 1427.
What did you find?
We find that the elasticity of descendants’ earnings with respect to ancestors’ earnings is positive and statistically significant, with a point estimate around 0.04. In other words, being the descendant of a family at the 90th percentile of earnings distribution in 1427 instead of one at the 10th percentile is associated with a 5% increase in earnings today. The wealth elasticity is also statistically significant and the magnitude of the implied effect is even larger: the 10th–90th exercise entails a 12% difference in real wealth today. Even without using regression tools, a simple descriptive analysis gives a flavour of our core findings. The following table reports for the top 5 and bottom 5 earners among current taxpayers (at the surname level),the modal value of the occupation, and the percentile in the earnings and wealth distribution in the 15th century (the surnames are replaced by capital letters for confidentiality reasons). It turns out that the top earners among today's taxpayers were already at the top of the socio-economic ladder six centuries ago, with earnings and wealth always above the median. On the contrary, the poorest surnames had less prestigious occupations, and their earnings and wealth in most cases were below the median.
In the paper, we also show econometric evidence of dynasties in certain (elite) occupations (lawyer, banker, doctor or pharmacist, goldsmith): the more intensively the ancestors were employed in the same occupations, the higher the probability of belonging to such an occupation today.
What implications does this have for the study (research and teaching) of wealth concentration or economic inequality?
Six centuries have not been able to untie the Gordian knot of socio-economic inheritance. This calls for policies that are able to reduce the role of background, in particular we are thinking of good, easily accessible education and appropriate regulation to limit rent extraction in the economy.
What are the next steps in your agenda?
This paper is part of a more general research agenda on the role of misallocation (of talent, human capital, physical capital, etc.) as an explanatory factor for the stagnant path of total factor productivity in Italy. We are now working on the role of regulation and other formal rules on the performance of the Italian economy, with a particular focus on the performance of the public sector.
Barone, G., and Mocetti, S. (2021) "Intergenerational Mobility in the Very Long Run: Florence 1427–2011", The Review of Economic Studies, 88(4); pp.1863–1891,