Guglielmo Barone and Sauro Mocetti write,
We focus on the Italian city of Florence, for which data on taxpayers in 1427 – including surnames, occupations, earnings, and wealth – have been digitalised and made available online. We matched these data with those taken from the tax records relating to the city of Florence in 2011. Family dynasties are identified by surnames. Table 1 offers a first flavour of our results. We report for the top five and bottom five earners among current taxpayers (at the surname level) the modal value of the occupation and the percentiles in the earnings and wealth distribution in the 15th century (the surnames are replaced by capital letters for confidentiality). The top earners among the current taxpayers were already at the top of the socioeconomic ladder six centuries ago – they were lawyers or members of the wool, silk, and shoemaker guilds; their earnings and wealth were always above the median. In contrast, the poorest surnames had less prestigious occupations, and their earnings and wealth were below the median in most cases.
Yes, this is reminiscent of and reinforces the findings of Gregory Clark in The Son Also Rises. Recall my review of Clark’s book.
That reminds me of something. Just eight years ago, at EconLib, Gary Becker wrote an encyclopedia entry about Human Capital (related to his paper Human Capital and the Rise and Fall of families), in which he said:
Do you think this Italian story, and the works of Clark’s you mention in your post, provide a rebuttal of sorts to Becker’s claims?
Maybe there’s a distinction to be drawn between New Money and Old Money. Becker’s effect isn’t seen among Old Money families; if it did, they wouldn’t be Old Money families. Just a thought.
It might be useful to think of the family as its own O-ring of production. The really good ones can be quite productive, and genetics gives them a self-reinforcing element, which is why you see a lot of stability at the top of the food chain.
The majority of other families are less than perfect and it takes only a small fraction of screwballs and bad apples to ruin any synergistic potential it might have, which is why the bottom tends to stay at the bottom.
I have a fundamental problem with this analysis that is based (it seems) largely on surnames. That is: only the male children’s descendants keep the name (ignoring close family marriage – which often doesn’t turn out so well). That means that after 10 generations (without close family marriage) less than 0.1% of descendants will have the same surname. Even with close family marriage, one has to make quite strong assumptions to get to even low single digits.
I think this says more about the ‘family firm’ than about inheritability – that is successful ‘family firms’ can remain so for several generations.
If I have missed something important please enlighten me!
One would expect that the family firm would provide particularly high correlation between adjacent generations. Yet the finding is that the correlation between distant generations is high even though the correlation between adjacent generations is only modest.