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Paula Gobbi (Université libre de Bruxelles - ECARES and Centre for Economic Policy Research - CEPR), Childless Aristocrats. Fertility, Inheritance, and Persistent Inequality in Britain (1650–1882)

This paper studies how inheritance schemes may contribute to persistent inequality through changing fertility incentives. We first present an economic institution that enabled the British peerage to consolidate their position at the top of the wealth distribution despite demographic pressures that threatened the continuation of aristocratic lineages. Around 1600, 30-40 percent of married women in the peerage were childless. We show that settlements increased by 815 pp. the likelihood to have children. Our empirical strategy exploits that settlements were signed only if a peer survived until his heirs wedding. Hence, the birth order of the heir provides exogenous variation in the likelihood to sign a settlement. Next, we present a general model of inheritance and fertility. We show that inter-generational hyperbolic discounting rationalizes the use of inheritance schemes that restrict proprietors (e.g., settlements or trusts) and its effects on fertility. Our results have two sets of implications: First, fertility and inequality can be positively associated in the extensive margin. Second, exponential discounting across generations can fail to explain inheritance rules that restrict proprietors and ignore important effects on fertility.