ABSTRACT
How are the forces that drove inequality trends to be identified and isolated? How are the major forces to be separated from the minor ones? This book was guided in this quest by my reading of the evidence that most of the changes in inequality from 1827 to 1901 seem to have been driven by changes in factor rewards - the structure of pay from the lowest to the
DATA, THEORY .4ND DEBATE 201 highest skill, rents on land relative to the wages of labor, and returns to conventional capital relative to all other inputs - not by changes in the distribution of factor ownership. Changes in earnings inequality are explained primarily by changes in the structure of pay rather than by employment shifts from occupations with low skill content to those with high. While skills may well have become more equally distributed in the late nineteenth century, it was the erosion in the premium on those skills, and the relative increase in the scarcity of unskilled labor, that did most of the work in driving earnings inequality. Similarly, the increase in the top 5 per cent's share in national income across the French Wars had little to do with increased concentration of landed wealth - although such an increase may well have taken place - but rather with the behavior of rents per acre. Changes in the distribution of wealth induced by accumulation served to reinforce the influence of changes in factor rewards on the distribution of income, but it was initial change in factor rewards that seemed to matter in setting the Kuznets curve in motion, and contributing to turning points.
