The Causes of Wealth Inequality (15): Slavery

Income inequality doesn’t have the same causes everywhere, as is evident from this study which points to the fact that slavery in the U.S., which was abolished almost 150 years ago, still has nefarious effects today.

Within the US, the institution of slavery has historically been associated more heavily with specific areas – primarily the South. This geographic differentiation allows us to identify the link between past slavery and current outcomes. We start by reviewing, over a cross section of counties, the effect of the intensity of slavery in 1870 on the current level of income per capita. For the year 2000, we find no evidence that those counties that employed slave labour more heavily are poorer than those that did so to a lesser extent or not at all (even though a negative relationship between slavery and income was still present until 1970).

Next we turn to the impact of slavery on current income disparities and we find that it is indeed associated with a higher degree of income inequality. In other words, former slave counties are more unequal in the present day. They also show a higher poverty rate and a higher degree of racial inequality. Moreover, the data say that the impact of slavery on economic inequality and poverty runs through its impact on racial inequality, and not vice versa. (source)

How exactly does slavery lead to long turn income inequality? If slavery is seen as a symptom of feelings of racial superiority, then it’s not far-fetched to assume that those feelings didn’t die with slavery and continued to affect blacks by way of discriminatory policies and practices, including in wage determination and other areas that influence economic inequality, such as the provision of education.

This, by the way, also makes the case for reparations a bit stronger. More posts in this series are here.

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