Long-Term Effects of Equal Sharing: Evidence from Inheritance Rules for Land.

This article examines the long-term economic effects of agricultural inheritance rules in Germany, focusing on two regimes: equal division of land among all children and unequal division where land is indivisible and passed to a single heir. Using historical and modern data with a geographic regression discontinuity design, the study finds that equal division areas historically exhibited lower landholding inequality and, over time, developed higher average incomes, more entrepreneurship, greater innovation, and a right-shifted distribution of skill, income, and wealth. The evidence suggests that equal division facilitated occupational upgrading by providing broader access to wealth, which reduced credit constraints and encouraged industrial by-employment and entrepreneurial activities during Germany's transition from an agrarian to an industrial economy. Importantly, these differences are not explained by pre-industrial advantages, indicating that inheritance rules acted as an inclusive institution shaping Germany's industrial geography and economic development.