Distributive patterns in settler econonrles: agricultural income inequality during the First Globalization (1870-1913)

Abstract

The aim of this paper is to identify different distributive patterns in the settIer economies of Argentina, Australia, Canada, Chile, New Zealand and Uruguay during the First Globalization (1870-1913).As agriculture was the most important activity in settIer economies and the main sector that led to land expansion on the frontier, a study of the process of income generation and the evolution of distribution in this sector is of great interest. The empirical research offered here includes a discussion of the research methodology, the results and some conjectures about long-run inequalities. First, agricultural income (or product) per worker is estimated and, based on a shift share approach, the relative performance of the countries in the 'club' is analysed, focusing on (total and sector) growth and convergence. Then the functional income distribution is presented (total wages, land rents and profits) and two distributive patterns are discussed. On the one hand, former British territories promoted capitalist relations with relatively high wages and profits that encouraged larger markets and greater investment. In contrast, former Spanish colonies had economic relations based on agrarian rents, which made for income concentration and low stimulus to capital accumulation. During this period income distribution worsened in the Australasian economies and Canada, but it deteriorated even more significantly in the South American Southern Cone. These differences among settIer economies are consistent with dissimilar dynamics of expansion into new land and the consolidation of institutional arrangements that caused contrasting patterns of distribution.