Deviant behaviour? Inequality in Portugal 1565–1770

This study offers an estimate of Portuguese income inequality over a period of more than 200 years. It is presented in three widely spaced benchmarks: 1565, 1700 and 1770. This entirely new index is based in large measure on a little-researched annual personal income tax (décima) instituted in 1641. It covered all social classes, including nobility and clergy and every form of household earnings, and permits therefore a singularly accurate measure. It allows us to conclude that, in contrast with early modern Europe in general, Portugal experienced a notable decline in economic inequality. Several freshly minted quantitative indicators enable us to conclude that the burden of the explanation for this apparently ‘deviant’ behaviour can be ascribed to changes in the functional distribution of income. Significant transformations in Portuguese agriculture—towards labour-intensive products like maize and wine—permanently shifted the wage–rental ratio in favour of labour. The skill premium fell but its contribution was relatively modest. It was a time of sustained economic growth, but this was not associated with pronounced urbanization or industrialization