Abstract

The paper examines income inequality in the Western part of the Austro-Hungarian Empire in 1911. It estimates regional levels of income, gives an estimate of the regional income distribution, and explains the degree of inequality. The study relies on a mix of income tax data and a social tables approach. The tax statistics provide information on the sources of income, on the number of taxpayers in each of 18 tax classes, and the amount of tax paid. This information exists for each of the 400 districts of the country. The lower two thirds of the population did not pay any income tax. In order to include the lower income classes in the analysis, we group the population into occupational groups with typical maximum income similar to the upper limit of the income tax classes. Altogether, we arrive at grouped observations of annual income. In order to derive an estimate of inequality from grouped observations, we make assumptions about the form of the income distribution. For an explanation of the findings for median income and the degree of inequality, we use information on the sectoral structure of districts, their demographic characteristics, and data on various aspects of production.

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