Can Colonial Institutions Explain Income Distribution? Evidence from Rural Colonial India
This paper studies the relationship between land revenue systems and the levels of agricultural income inequality in colonial India. The first district-level comparative estimates of agricultural income inequality are introduced using wage/income ratios for 1916. The presence of permanently settled lands -which had their land revenue demand fixed in perpetuity- is used as an instrument for the land revenue systems to analyse their causal impact on agricultural income inequality. Results show that districts with a larger proportion of non-landlord land revenue systems presented more egalitarian agricultural income distributions. This was due to non-landlord land revenue systems allowing for lower rents, less under-tenure rights and lower indebtedness of cultivators.