Historical Social Stratification and Mobility in Costa Rica, 1840-2006

by Daniel Diaz Vidal (University of Tampa)

The full article from this post was published on The Economic History Review and is now available on Early View at this link

Banana Workers – available at <https://travelcostarica.nu/history>

The social mobility rate represents the degree to which the socioeconomic status of descendants varies relative to that of their progenitors. If the rate is very low then the social pyramid remains unchanged over many generations. Conversely, if the rate of social mobility is very high, then family, cultural, ethnic, and historical backgrounds are not useful in explaining the current social status of an individual. In essence, history determines present outcomes when there are lower rates of social mobility. Interest in social mobility research has grown since the Great Recession because of its relationship with socioeconomic inequality, or political upheaval.

This renewed interest in the study of social mobility has generated new approaches to this subject.  Recent social mobility studies which use surnames show that underlying social mobility rates in all cases studied are both very low and very similar across countries and time periods.[1] This research uses an enhanced surname methodology and previously unused historical data to study  social mobility in a new Spanish speaking, Central American economy. Costa Rica is particularly interesting as it has exhibited relatively egalitarian distributions of income since colonial times. This is significantly different to the previous Latin American economy, Chile, which had been the focus of a surname study of social mobility similar to this one. In order to study historical social mobility in Costa Rica over the past century and a half, one cannot use traditional father-son linkages since constructing such a dataset would be extremely difficult, if not impossible.  Traditional methods require panel datasets, such as the United States National Longitudinal Survey of Youth (NLSY), or rich population registries like those found in Sweden and  Iceland. This limits the historical and geographical contexts in which social mobility can be studied. Surnames facilitate research  by permitting the clustering of people to identify groups of sons who collectively originated from a group of fathers, without needing to follow the branches of each specific family tree.

One of the methodologies used in this research involves overrepresentation of surname groups within certain elite professions in the 2006 electoral census. The  central idea is to see how frequent a surname is within the census and then use that to predict how many we should find in a sample of elite professionals. If a certain surname group represents 1 per cent of the population but 5 per cent of the individuals in high skilled professions, then they are overrepresented, and of higher status. In order to study how long the rich stay rich in Costa Rica, the author compiled a dataset of historically advantaged groups before the beginning of the elite profession dataset, in order to avoid selection bias.  The groups are: top coffee growers from 1911, coffee exporters in 1934, teachers and professors between 1923-1933, Jamaican banana growers from 1908, and ethnically- mixed plantation owners.  Figure 1 shows how these elite groups were still overrepresented at the end of the twentieth century and that they will require an average of six to seven generations to regress to the mean. These results are comparable to those produced by Clark, for a completely different set of socioeconomic and historical backgrounds.[2]  Of particular interest is the comparison of the results with Chile, since the two countries had different colonial experiences and varying degrees of inequality throughout their histories.

Figure 1. Elite Group Representation in Costa Rica – Note: The vertical black line determines where the data end and the projections begin.
Sources: Tribunal Supremo de Elecciones, Padron Nacional Electoral; Costa Rica, Direccion General de Estadística y Censos, Lista de cultivadores de banano, anuario 1907; Costa Rica, Instituto de Defensa del Café de Costa Rica, Revista del Instituto de Defensa del Café de Costa Rica. See article for further details.

This research shows that regression to the socioeconomic mean in Costa Rica occurred at a slower pace than that predicted by the previous literature. This implies that the equality-driven policy maker should be more concerned with economic growth, which should increase the average income of every strata, at least under a Kaldor compensation criterion[3], and with compressing the distance between social strata, rather than concerning itself with social mobility. This study has shown how historical groups take fewer generations to regress to the mean in comparison to the Chilean case studied in Clark.[4] This is attributed to the fact that the historical groups were not that far apart to begin with.

To contact the author: DDIAZVIDAL@ut.edu

[1]           G. Clark, The Son Also Rises: Surnames and the History of Social Mobility. Princeton: Princeton University Press, 2015; G. Clark and N. Cummins, ‘Surnames and Social Mobility in England, 1170-2012’, Human Nature, 25 (2014), pp. 517-537.

[2]           Clark, The Son also rises.

[3]           This posits that an activity moves the economy closer to Pareto optimality if the maximum amount the gainers are prepared to pay to the losers to agree to the change is greater than the minimum amount losers are prepared to accept

[4]            Ibid.

The Paradox of Redistribution in time: Social spending in 54 countries, 1967-2018

By Xabier García Fuente (Universitat de Barcelona)

This research is due to be presented in the sixth New Researcher Online Session: ‘Spending & Networks’.

Money of various currencies. Available at Wikimedia Commons.

Why are some countries more redistributive than others? This question is central to current welfare state politics, especially in view of rising levels of inequality and the ensuing social tensions. Since coming to power in 2019, Brazil’s far-right government has restricted access to Bolsa Familia—a conditional cash-transfer program—despite its success at reducing poverty with a very low cost (less than 0.5% of national GDP). In richer countries, the social-democratic project is said to be obsolete, as left-wing parties forsake egalitarian policies to cater to economic winners (Piketty, 2020).

How can we make sense of this sort of distributive conflict? Are there common patterns in rich and middle-income countries? My research suggests that welfare state institutions show great inertia, so we need to observe the origins of social policies to explain current redistributive outcomes. Initial policy positions —how pro-poor or pro-rich social transfers were— determine what groups emerge as net winners or net losers when social expenditure increases, which crucially affects the viability and direction of policy change.

Korpi and Palme (1998) famously suggested the existence of a Paradox of Redistribution: ‘the more we target benefits at the poor … the less likely we are to reduce poverty and inequality’. In their framework, progressive programs may be more redistributive per euro spent, but they generate zero-sum conflicts between the poor and the middle-class and obstruct the formation of redistributive political coalitions. In contrast, universal programs align the preferences of the poor and the middle-class and lead to bigger, more egalitarian welfare states. In sum, redistribution increases as transfers become bigger and less pro-poor.

Using survey micro-data provided by the Luxembourg Income Study (LIS), my research updates Korpi and Palme’s (1998) study and addresses two gaps. First, I extend the sample to 54 rich and middle-income countries, including elitist welfare states in Latin America and other middle-income countries. As Figure 1 shows, extending the sample would clearly refute the Paradox: redistribution is higher in more pro-poor countries.

Second, in line with the dynamic political arguments suggested in the Paradox, I explore the evolution of social transfers and redistribution within countries over time. Overall, countries have increased redistribution by making their transfers less pro-poor, which matches the predictions of the Paradox (see Figure 2). The relationship is especially strong in Ireland, Canada, United Kingdom and Norway. Parting from highly progressive (pro-poor) policy positions, these countries have improved redistribution increasing expenditure and reducing their bias towards the poor.

Latin American countries are a notorious exception to this pattern. They are markedly pro-rich and, contrary to the cases above, they have improved redistribution very modestly by becoming more pro-poor (see Figure 3).

What does it mean that redistribution increases as transfers become more or less pro-poor? United Kingdom and Mexico provide a good example (see Figure 4). In the United Kingdom, redistribution through social transfers increased from 7 Gini points in 1974 to 19 Gini points in 2016. In the same period, the share of total social transfers received by the poorest 20% of the population decreased from 35% to 18%. In Mexico, the share of total social transfers obtained by the poorest 20% went from 2% in 1984 to 10% in 2016, while the share obtained by the richest 20% decreased from 66% to 51%. Yet, despite these advances, redistribution through social transfers in Mexico remains very low (2.5 Gini points in 2016, from 0.1 Gini points in 1984).


In countries with pro-poor social transfers, extending coverage involves reaching up the income ladder to include richer constituencies, which narrows the gap between net winners and net losers. This reduces the salience of distributive conflicts and eases welfare state expansion, leading to higher redistribution. However, as transfers become more pro-rich the margin to leverage the progressivity-size trade-off narrows, which helps explain the inability of current welfare states to increase redistribution as inequality rises.

In countries with pro-rich social transfers, extending coverage involves reaching down the income ladder to include the poor. Launching programs for the poor requires rising taxes or cutting the benefits of privileged insiders, which creates a clearly delineated gap between net winners and net losers. This increases the salience of distributive conflicts, leading to smaller, less egalitarian welfare states.

In sum, social policy design is very persistent because it crucially shapes distributive conflicts. Advanced welfare states have increased redistribution by getting bigger and less progressive (less pro-poor). This fits with historical evidence that advanced welfare states grew from minimalist cores, but it also describes contemporary policy change. Following this same reasoning, elitist welfare states in developing regions will find it difficult to become more egalitarian. Figure 5 shows the persistency of distributive outcomes across welfare regimes.


Korpi, W. and Palme, J. (1998). The paradox of redistribution and strategies of equality: Welfare state institutions, inequality, and poverty in the western countries. American Sociological Review, 63(5):661–687.

Piketty, T. (2020). Capital and Ideology. Harvard University Press.

Xabier García Fuente

Twitter: @xabigarf

Are university endowments really long-term investors?

by David Chambers, Charikleia Kaffe & Elroy Dimson (Cambridge Judge Business School)

This blog is part of our EHS 2020 Annual Conference Blog Series.



Flags of the Ivy League
Flags of the Ivy League fly at Columbia’s Wien Stadium. Available at Wikimedia Commons.


Endowments are investment funds aiming to meet the needs of their beneficiaries over multiple generations and adhering to the principle of intergenerational equity. University endowments such as Harvard, Yale and Princeton, in particular, have been at the forefront of developments in long-horizon investing over the last three decades.

But little is known about how these funds invested before the recent past. While scholars have previously examined the history of insurance companies and investment trusts, very little historical analysis has been undertaken of such important and innovative long-horizon investors. This is despite the tremendous influence of the so-called ‘US endowment model’ of long-horizon investing – attributed to Yale University and its chief investment officer, David Swensen – on other investors.

Our study exploits a new long-run hand-collected data set of the investments belonging to the 12 wealthiest US university endowments from the early twentieth century up to the present: Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, Princeton University, the University of Pennsylvania, Yale University, the Massachusetts Institute of Technology, the University of Chicago, Johns Hopkins University and Stanford University.

All are large private doctoral institutions that were among the wealthiest university endowments in the early decades of the twentieth century and which made sufficient disclosures about how their funds were invested. From the latter, we estimate the annual time series of allocations across major asset classes (stocks, bonds, real estate, alternative assets, etc.), endowment market values and investment returns.

Our study has two main findings. First, we document two major shifts in the allocation of the institutions’ portfolios from predominantly bonds to predominantly stocks beginning in the 1930s and then again from stocks to alternative assets beginning in the 1980s. Moreover, the Ivy League schools (notably, Harvard, Yale and Princeton) led the way in these asset allocation moves in both eras.

Second, we examine whether these funds invest in a manner consistent with their mission as long-term investors, namely, behaving countercyclically – selling when prices are high and buying when low. Prior studies show that pension funds and mutual funds behave procyclically during crises – buying when prices are high and selling when low.

In contrast, our analysis finds that the leading university endowments on average behave countercyclically across the six ‘worst’ financial crises during the last 120 years in the United States: 1906-1907, 1929, 1937, 1973-74, 2000 and 2008. Hence, typically, during the pre-crisis price run-up, they decrease their allocation to risky assets but increase this allocation in the post-crisis price decline.

In addition, we find that this countercyclical behaviour became more pronounced in the two most recent crises – the Dot-Com Bubble and the 2008 Global Financial Crisis.