The Fetters of Inheritance?

Did European regions industrialize first because their institutions fostered urbanization? The paper presented in this ZEW Research Seminar argues that culture, precisely an agricultural inheritance tradition that would immobilize the rural population, was no obstacle to economic growth, as commonly thought. Instead, equal partition tied excess labor to the land and fostered the establishment of a low-wage low-skill industry there. Using European data, the authors document that areas of equal partition areas are today richer than primogeniture areas. With a focus on identification, they conduct fuzzy spatial RDD and IV regressions for the German state of Baden-Württemberg in 1895, the 1950s, and today. The authors find that inheritance rules caused, in line with their theoretical predictions, higher incomes, population densities, and industrialization levels in areas with equal partition, meanwhile they document that equal partition reduced migration. Results suggest that more than a third of the overall inter-regional difference in average per capita income in present-day Baden Württemberg, or 597 Euro, can be attributed to equal partition. The reasons for Europe's uniqueness do not lie in the supremacy of primogeniture, and have to be searched elsewhere.