RISK, ASSET MARKETS, AND INEQUALITY: EVIDENCE FROM

MEDIEVAL ENGLAND

Cliff T. Bekar

Lewis & Clark College

and

Clyde G. Reed

Simon Fraser University

Abstract

Between the eleventh and fourteenth centuries English peasants faced large income shocks relative to mean incomes. Innovations in property rights over land induced peasants to respond by trading small parcels of land as part of their risk coping strategy. The same period witnessed a dramatic increase in inequality in the distribution of peasant landholdings. We argue that these events are related. When agents are able to trade their productive assets to manage risk, wealth dynamics become unstable and generate increasing inequality over time. We analyze the effects of these dynamics in the context of medieval English land markets and peasant landholdings.