Homogeneous middles vs. heterogeneous tails, and the end of the ‘Inverted-U’: the share of the rich is what it's all about
AbstractThis paper examines the current global scene of within-nations distributional disparities. There are three main conclusions: first, that the statistical evidence for the ‘upwards’ side of the “Inverted-U” between inequality and income per capita seems to have vanished, as many lowand low-middle income countries now have a distribution of income similar to that of most middle-income countries (other than those of Latin America and Southern Africa). That is, half of Sub-Saharan Africa and many countries in Asian, including India, China and Vietnam, now have an income distribution similar to that found in North Africa, the Caribbean and the secondtier NICs. And this level is also similar to that of half of the first-tier NICs, the Mediterranean EU and the Anglophone OECD (excluding the US). As a result, about 80% of the world population now live in countries with a Gini around 40. So, the pre-globalisation statistical evidence for the hypothesis that posits that (for whatever reason) from a distributional point of view “things have to get worse before being able to get better” is rapidly drawing to a close. Second, that among middle-income countries it is only Latin America and Southern Africa that are living in an inequality limbo of their own. And third, that within an overall trend of rising inequality, there are two opposite distributional forces at work. One is ‘centrifugal’, and takes place at the two tails of the distribution—leading to an increased diversity across country in the shares appropriated by the top 10 percent and bottom forty percent. The other is ‘centripetal’, and takes place in the middle—leading to a remarkable uniformity across countries in the share of income going to the half of the population located between deciles 5 to 9. Therefore, globalisation is creating a situation where virtually all the within-nation distributional differences are the result of what the very rich and the poor are able to appropriate. In turn, it seems that regardless of the political settlement at work current distributional outcomes are characterised by half of the population (located in the middle and upper-middle of the distribution) acquiring strong ‘property rights’ over half of the national income. The other half, however, seems to be increasingly up for grabs between the very rich and the poor. And if what really matters in distributional terms is the income-share of the rich—because the rest ‘follows’ (middle classes able to defend their shares, and workers with ever more precarious jobs in ever more ‘flexible’ labour markets)—everybody attempting to understand the within-nations disparity of inequality (including myself) should always be reminded of this basic distributional fact following the example of Clinton’s campaign strategist: by sticking a note in our notice boards saying “It is the share of the rich, stupid”.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1111.
Date of creation: 26 Jan 2011
Date of revision:
Contact details of provider:
Web page: http://www.econ.cam.ac.uk/index.htm
Inequality; poverty; income polarisation; Latin America; South Africa; US;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
- O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-06-04 (Africa)
- NEP-ALL-2011-06-04 (All new papers)
- NEP-SEA-2011-06-04 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Moreno-Brid, Juan Carlos & Ros, Jaime, 2009. "Development and Growth in the Mexican Economy: An Historical Perspective," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195371161, October.
- Palma, J.G., 2013. "How to create a financial crisis by trying to avoid one: the Brazilian 1999-financial collapse as "Macho-Monetarism" can't handle "Bubble Thy Neighbour" levels of inflows," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1301, Faculty of Economics, University of Cambridge.
- Peter Edward, Andy Sumner, 2013. "The Geography of Inequality: Where and by How Much Has Income Distribution Changed since 1990?-Working Paper 341," Working Papers, Center for Global Development 341, Center for Global Development.
- Andy Sumner, 2012. "Where Will the Worldâ€™s Poor Live? An Update on Global Poverty and the New Bottom Billion," Working Papers, Center for Global Development 305, Center for Global Development.
- Palma, J.G., 2012. "Was Brazil's recent growth acceleration the world's most overrated boom?," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1248, Faculty of Economics, University of Cambridge.
- Andy Sumner, 2012. "The Buoyant Billions: How â€œMiddle Classâ€ Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)," Working Papers, Center for Global Development 309, Center for Global Development.
- Charles Kenny, Jonathan Karver, and Andy Sumner, 2012. "MDGs 2.0: What Goals, Targets, and Timeframe? - Working Paper 297," Working Papers, Center for Global Development 297, Center for Global Development.
- Peter Edward & Andy Sumner, 2013. "Inequality from a global perspective: An alternative approach," Working Papers 302, ECINEQ, Society for the Study of Economic Inequality.
- Thomas Goda & Photis Lysandrou, 2011. "The contribution of wealth concentration to the subprime crisis: a quantitative estimation," DOCUMENTOS DE TRABAJO CIEF, UNIVERSIDAD EAFIT 010718, UNIVERSIDAD EAFIT.
- Basu, Kaushik, 2013. "Shared prosperity and the mitigation of poverty : in practice and in precept," Policy Research Working Paper Series 6700, The World Bank.
- Alex Cobham & Andrew Sumner, 2013. "Is it all about the tails? The Palma measure of income inequality," Working Papers 308, ECINEQ, Society for the Study of Economic Inequality.
- Alex Cobham, Andy Sumner, 2013. "Is It All About the Tails? The Palma Measure of Income Inequality-Working Paper 343," Working Papers, Center for Global Development 343, Center for Global Development.
- Thomas Goda, 2013. "Changes in income inequality from a global perspective: an overview," Working Papers, Post Keynesian Economics Study Group (PKSG) PKWP1303, Post Keynesian Economics Study Group (PKSG).
- Kuznets curve in Wikipedia English ne '')
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.