Land Markets and Inequality: Evidence from Medieval England

The 13th century witnessed a substantial increase in inequality in the distribution of peasant landholdings relative to the distribution of the late 11th century. Innovations in property rights over land in 12th century England induced peasants to include the trading of small parcels of land as part of their risk coping strategy. We argue that these events are related. Recent theoretical work in development economics has explored the relationship between inequality and asset markets. When agents are able to trade productive assets to manage risk, the resulting dynamics may generate increasing inequality over time. We employ a simulation strategy to analyze the impact of land markets in generating inequality in 13th century landholdings. We find that the dominant factor contributing to the unequal distribution of land was the interaction between emerging land markets and population growth driven by high fertility rates in households with large landholdings.