Abstract
This paper presents the conceptual framework and preliminary findings of two research projects investigating the role of inclusive institutions in shaping economic inequality in preindustrial Central and Northern Italy. The projects build, on one hand, on the well-established notion that public finances—particularly taxation, but also other forms of public revenue and expenditure—play a crucial role in influencing economic inequality. On the other hand, they rest on the idea that, at least during the early modern period, public finances were primarily managed at the municipal level. Consequently, the degree of elitism or inclusiveness characterizing municipal political institutions could lead to either inequality-enhancing or inequality-reducing policies.
Municipal assemblies were responsible for determining how to meet the State’s fiscal and military demands. Their decisions—whether to rely on more or less regressive direct taxation, or instead to lease or sell public assets such as common lands, rights to natural resources, or local duties—could produce divergent effects on the trajectory of economic inequality. In some cases, these choices disadvantaged the lower and middle classes; in others, they fostered a redistribution of wealth from richer to poorer households. It is therefore plausible that municipal councils dominated by wealthy families tended to implement policies serving their own interests, whereas more inclusive institutions were inclined to adopt redistributive measures.
Empirically, the research projects examine: (I) the degree of inclusiveness in municipal institutions, measured in terms of representativeness and turnover; (II) how this institutional structure influenced municipal revenues derived from direct taxation and other income sources (such as the leasing or sale of common assets); and (III) how these processes, in turn, affected local patterns of economic inequality.