Global Income Inequality

SSRN Electronic Journal, 2000

Several studies have recently found that world income inequality declined during the closing years of the twentieth century. However, these studies feature a number of shortcomings, including the use of outdated national income estimates to measure inequality between countries, as well as sparse data to capture the smaller (but growing) component found within countries. The current study addresses these concerns and offers new estimates of world income inequality based on 151 countries covering 95 percent of the world's population during the 1990–2008 period. Overall, the results are fairly compatible with prior efforts, lending greater confidence to earlier findings. Nevertheless, the results suggest that prior studies covering the 1990s overestimate the decline in between-country inequality, but underestimate the rise in within-country inequality. Consequently, total inequality did not begin to decline substantially until the post-2000 era. After presenting these estimates, I then examine factors associated with income mobility among the 15,100 subnational percentile groups in my data set. The results suggest that (a) the negative effect of inequality is larger than the positive effect of economic growth among the poorest 25 percent of the world's population, and (b) late industrialization has contributed to income convergence between countries, while economic globalization has primarily served to stretch income distributions within nations.

2006

Global inequality is a relatively recent topic. It was not until the early 1980s that the first calculations of inequality across world citizens were done. 1 This is because in order to calculate global inequality, one needs to have data on (within-) national income distributions for most of the countries in the world, or at least for most of the populous and rich countries. But it is only from the early-to mid-1980s that such data became available for China, 2 the Soviet Union and its constituent republics and large parts of Africa. Before we move to an analysis of global inequality, however, it is useful to set the stage by delineating what topics we shall be concerned with and what not. This is necessary precisely because of the relative underdevelopment of the topic, reflected in the fact that the same or similar terms are often used in the literature to mean different things. We need to distinguish between inequality among countries' mean incomes (inter-country inequality or Concept 1 inequality as dubbed by Milanovic, 2005), inequality among countries' mean incomes weighted by countries' populations (Concept 2 inequality), and inequality between world individuals (global or Concept 3 inequality). Concept 1 inequality deals with convergence and divergence of countries' incomes, and although at first this line of work was couched in inequality terms (see Baumol, 1986), most of the later work used cross

CEPAL Review

This article presents a multi-perspective discussion of trends in income inequality. Recent evidence from many sources shows that global income inequality is high and relatively stable, with the main changes being driven by developments in China and India. In developed countries, the trend has been towards higher levels of inequality over the last thirty years; and this has also been true of developing countries in the past decade, with the exception of Latin America, which is analysed here in detail. In the region, income became less unevenly distributed between 2002 and 2014, mainly because inequality within countries declined in most cases; but the latest measurements suggest that this trend is faltering.

2007

This paper examines the nature and extent of global and regional income distribution and inequality using the most recent country level data on income distribution drawn from World Bank and UNU-WIDER studies for the period 1993-2000. The methodology used is a recently developed technique to fit flexible income distributions to limited aggregated data. Empirical results show a very high degree of global inequality, but with some evidence of inequality decreasing between the two years.

PKSG Working Paper, No. 1303 , 2013

Rising income inequality has recently moved into the centre of political and economic debates in line with increasing claims that a global rise in income inequality might have been a root cause of the subprime crisis. This paper provides an extensive overview of world scale developments in relative (i.e. proportional) income inequality to determine if the claims that the latter was high prior to the crisis are substantiated. The results of this study indicate that (i) non-population adjusted inequality between countries (inter-country inequality) increased between 1820 and the late 1990s but then decreased thereafter, while there was a steady decrease after the 1950s when population weights are taken into account; (ii) income inequality between ‘global citizens’ (global inequality) increased significantly between 1820 and 1950, while there was no clear trend thereafter; (iii) contemporary relative income inequality within countries (intra-country inequality) registered a clear upward trend on a global level since the 1980s.

2011

Ritzer/Blackwell, 2015

This essay describes the evolution of global income inequality over the past two-and-a-half centuries, and its likely evolution during the twenty-first century. Global income inequality—the sum of inequality within and between nations—is massive today, the legacy of uneven growth in the world’s regions since the advent of the Industrial Revolution. Because incomes shot up in the West while lagging behind in Asia and Africa over most of this period, between-nation income inequality grew dramatically, and most global income inequality now lies between nations. Economic growth remains uneven across the world’s regions, but the fastest growth is occurring in populous poor regions of the world, compressing between-nation inequality. As a result, global income inequality is currently receding, according to most (but not all) investigations of the matter. The compression of global inequality is attributable to rapid economic growth in China and India: If the rate of economic growth in China and India were the same as in the rest of the world, global income inequality would not be declining. The slow rate of economic growth in sub-Saharan Africa, on the other hand, is retarding the decline. A high level of global income inequality is problematic in large part because it results in abject poverty for masses of people. If average income in the world continues to rise, alleviating abject poverty in the twenty-first century, for future generations the level of global income inequality might matter much less than the level of income inequality within local communities.

The World Bank eBooks, 2012

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.