Winners and losers from agrarian reform: Evidence from Danish land inequality 1682–1895

Abstract

Pro-market and pro-farmer agrarian reforms enacted in eighteenth century Denmark laid the basis for rural development but we demonstrate that they also resulted in increased inequality. We investigate this using a novel parish-level database spanning more than two centuries. We identify the impact of land quality on inequality following the reforms by instrumenting with soil type and find increases in areas with more productive land. We propose and find evidence for a mechanism whereby agrarian reforms allowed areas with better soil quality to realize greater productivity gains. This in turn led to greater population increases, and a larger share of smallholders and landless laborers. Finally, we demonstrate the impact on the winners and losers: more unequal areas witnessed increases in top incomes, but greater emigration of the rural poor, to the United States in particular. Thus, the losers were able to vote with their feet, in stark contrast to those who might lose from similar reforms in developing countries today.