Post-colonial trends of income inequality: Evidence from the overseas departments of France

The link between former colonies and their colonizers has implications for inequality in the post-colonial period. In this paper, I provide evidence from a unique setting in which former colonies were administratively assimilated into the colonial metropolis. Putting together a novel income tax dataset for the four oldest French colonies, now overseas departments of France, I estimate the evolution of income inequality from decolonization in 1946 to the present. I find that the top income shares declined rapidly since decolonization but remained consistently higher than in mainland France. Exploiting contemporary administrative data, I document that mainland-born individuals are over-represented at the top of the labor income distribution and in the high-paying public sector in the overseas departments. Thus, while departmentalization reduced overall inequality, it perpetuated a legacy of colonial income hierarchies into the post-colonial era. • Post-colonial assimilation into the metropolis has implications for inequality. • I compile novel income tax data since the 1950s for French overseas departments (ODs) to estimate inequality. • La Réunion had much higher inequality than the West Indies in the 1960s. • Inequality in the ODs fell rapidly but has not yet fully converged with mainland France. • Using administrative data, I show that assimilation perpetuated colonial income hierarchies. • Mainland-born individuals still occupy high ranks in the ODs.