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The disturbing "rise" of global income inequality

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Author Info
Xavier Sala-i-Martin () (Columbia University - Department of Economics)

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Abstract

We use aggregate GDP data and within-country income shares for the period 1970-1998 to assign a level of income to each person in the world. We then estimate the gaussian kernel density function for the worldwide distribution of income. We compute world poverty rates by integrating the density function below the poverty lines. The $1/day poverty rate has fallen from 20% to 5% over the last twenty five years. The $2/day rate has fallen from 44% to 18%. There are between 300 and 500 million less poor people in 1998 than there were in the 70s. We estimate global income inequality using seven different popular indexes: the Gini coefficient, the variance of log-income, two of Atkinson's indexes, the Mean Logarithmic Deviation, the Theil index and the coefficient of variation. All indexes show a reduction in global income inequality between 1980 and 1998. We also find that most global disparities can be accounted for by across-country, not withincountry, inequalities. Within-country disparities have increased slightly during the sample period, but not nearly enough to offset the substantial reduction in across-country disparities. The across-country reductions in inequality are driven mainly, but not fully, by the large growth rate of the incomes of the 1.2 billion Chinese citizens. Unless Africa starts growing in the near future, we project that income inequalities will start rising again. If Africa does not start growing, then China, India, the OECD and the rest of middle-income and rich countries diverge away from it, and global inequality will rise. Thus, the aggregate GDP growth of the African continent should be the priority of anyone concerned with increasing global income inequality.

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Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0102-44.

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Length: 77 pages
Date of creation: 2002
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Handle: RePEc:clu:wpaper:0102-44

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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.:
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  1. David Dollar, 2002. "Global Economic Integration and Global Inequality," RBA Annual Conference Volume, in: David Gruen & Terry O'Brien & Jeremy Lawson (ed.), Globalisation, Living Standards and Inequality: Recent Progress and Continuing Challenges Reserve Bank of Australia. [Downloadable!]
  2. repec:att:wimass:1920516 is not listed on IDEAS
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    Other versions:
  4. Heshmati, Almas, 2004. "A Review of Decomposition of Income Inequality," IZA Discussion Papers 1221, Institute for the Study of Labor (IZA). [Downloadable!]
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    Other versions:
  6. Heshmati, Almas, 2004. "Continental and Sub-Continental Income Inequality," IZA Discussion Papers 1271, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Ravallion, Martin, 2004. "Competing concepts of inequality in the globalization debate," Policy Research Working Paper Series 3243, The World Bank. [Downloadable!]
  8. Thierry Verdier, 2005. "Intégration commerciale « socialement responsable » : une approche en termes d'économie politique," Revue d’économie du développement, De Boeck Université, vol. 19(4), pages 55-121. [Downloadable!]
  9. Heshmati, Almas, 2004. "The World Distribution of Income and Income Inequality," IZA Discussion Papers 1267, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Timothy M Smeeding, 2002. "Globalisation, Inequality and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," RBA Annual Conference Volume, in: David Gruen & Terry O'Brien & Jeremy Lawson (ed.), Globalisation, Living Standards and Inequality: Recent Progress and Continuing Challenges Reserve Bank of Australia. [Downloadable!]
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    Other versions:
  12. Claudia Biancotti, 2006. "A polarization of inequality? The distribution of national Gini coefficients 1970–1996," Journal of Economic Inequality, Springer, vol. 4(1), pages 1-32, April. [Downloadable!] (restricted)
  13. Josef Novotný, 2007. "On the measurement of regional inequality: does spatial dimension of income inequality matter?," The Annals of Regional Science, Springer, vol. 41(3), pages 563-580, September. [Downloadable!] (restricted)
  14. Zhang, Yin & Wan, Guanghua, 2006. "Globalization and the Urban Poor in China," Working Papers RP2006/42, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  16. Heshmati, Almas, 2004. "Data Issues and Databases Used in Analysis of Growth, Poverty and Economic Inequality," IZA Discussion Papers 1263, Institute for the Study of Labor (IZA). [Downloadable!]
  17. Giovanni Bigazzi, 2007. "The Role Of Agriculture In The Development Of The People’S Republic Of China," Quaderni del Dipartimento di Economia, Finanza e Statistica 36/2007, Università di Perugia, Dipartimento Economia, Finanza e Statistica. [Downloadable!]
  18. Farhad Noorbakhsh, . "International Convergence and Inequality of Human Development: 1975-2001," Working Papers 2006_3, Department of Economics, University of Glasgow. [Downloadable!]
  19. David Gruen & Terry O'Brien, 2002. "Introduction to Globalisation, Living Standards and Inequality Recent Progress and Continuing Challenges," RBA Annual Conference Volume, in: David Gruen & Terry O'Brien & Jeremy Lawson (ed.), Globalisation, Living Standards and Inequality: Recent Progress and Continuing Challenges Reserve Bank of Australia. [Downloadable!]
  20. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (Estimated from Individual Country Distributions)," Economics Working Papers 615, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002. [Downloadable!]
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  21. Héctor Galindo Silva, 2007. "Polarización económica y emergencia de confilctos violentos internos un estudio empírico," DOCUMENTOS DE ECONOMÍA 004449, UNIVERSIDAD JAVERIANA - BOGOTÁ. [Downloadable!]
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