Industrialization, Wealth Concentration, and Elite Turnover

Thilo Nils Hendrik Albers, Felix Kersting and Timo Stieglitz

No 21362, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies how industrialization shaped wealth, its distribution, and elite composition in Prussia, using novel county wealth-tax records and individual-level millionaire data. To identify the effect of industrialization, we instrument industrial employment with proximity to carboniferous strata. More industrialized counties were wealthier, but the gains mainly accrued to the top 1 percent; they were also more unequal and less dominated by nobles at the top. Millionaire-level returns by asset type reveal a rate-of-return mechanism behind rising wealth concentration: industrial wealth earned higher, more dispersed, and scale-dependent returns than agricultural wealth. Differential entry into industrial ownership drove elite turnover.

Date: 2026-04
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