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What Do We Know about Global Income Inequality?

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  • Sudhir Anand
  • Paul Segal

Abstract

In this paper, we review the recent literature on global interpersonal income inequality. While all estimates agree that the level is very high, with a Gini of between 0.630 and 0.686 in the 1990s, there is no consensus regarding the direction of change. We discuss methodological issues, including the use of national accounts versus survey- based estimates of mean income (or consumption) and the choice of purchasing power parity exchange rates. Findings of a rise or fall in global income inequality are not robust across different estimation methods and datasets. Given the diversity of estimates and various sources of uncertainty, including gaps and errors in the underlying data, we conclude there is insufficient evidence to determine the direction of change in global interpersonal inequality in recent decades.

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 46 (2008)
Issue (Month): 1 (March)
Pages: 57-94

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Handle: RePEc:aea:jeclit:v:46:y:2008:i:1:p:57-94

Note: DOI: 10.1257/jel.46.1.57
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  1. Robert Ackland & Steve Dowrick & Benoit Freyens, 2013. "Measuring Global Poverty: Why PPP Methods Matter," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 813-824, July.
  2. World Bank, 2001. "World Development Report 2000/2001," World Bank Publications, The World Bank, number 11856, August.
  3. Chotikapanich, Duangkamon & Valenzuela, Rebecca & Rao, D S Prasada, 1997. "Global and Regional Inequality in the Distribution of Income: Estimation with Limited and Incomplete Data," Empirical Economics, Springer, Springer, vol. 22(4), pages 533-46.
  4. Korinek, Anton & Mistiaen, Johan A. & Ravallion, Martin, 2005. "Survey nonresponse and the distribution of income," Policy Research Working Paper Series 3543, The World Bank.
  5. Pritchett, Lant, 1995. "Divergence, big time," Policy Research Working Paper Series 1522, The World Bank.
  6. Theil, Henri & Theil, Henri, 1979. "World income inequality and its components," Economics Letters, Elsevier, Elsevier, vol. 2(1), pages 99-102.
  7. World Bank, 2007. "World Development Indicators 2007," World Bank Publications, The World Bank, number 8150, August.
  8. Surjit Bhalla, 2002. "Imagine There's No Country: Poverty, Inequality, and Growth in the Era of Globalization," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 348, July.
  9. Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 36(2), pages 669-721, June.
  10. Chotikapanich, Duangkamon, 1993. "A comparison of alternative functional forms for the Lorenz curve," Economics Letters, Elsevier, Elsevier, vol. 41(2), pages 129-138.
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