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Decomposing world income distribution : does the world have a middle class ?

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Author Info
Shlomo Yitzhaki
Milanovic, Branko

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Abstract

Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by " region " (countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality withi n countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil ' s), and the middle-income countries (those with per capita income between Brazil ' s and Italy ' s). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2562.

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Date of creation: 31 Mar 2001
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Handle: RePEc:wbk:wbrwps:2562

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Keywords: Inequality Poverty Impact Evaluation Governance Indicators Rural Poverty Reduction Services & Transfers to Poor

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References listed on IDEAS
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.:
  1. Mookherjee, Dilip & Shorrocks, Anthony F, 1982. "A Decomposition Analysis of the Trend in UK Income Inequality," Economic Journal, Royal Economic Society, vol. 92(368), pages 886-902, December. [Downloadable!] (restricted)
  2. 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, vol. 22(4), pages 533-46.
  3. T. Paul Schultz, 1998. "Inequality in the Distribution of Personal Income in the World: How it is Changing and Why," Working Papers 784, Economic Growth Center, Yale University.
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  4. Yitzhaki, Shlomo, 1982. "Relative deprivation and economic welfare," European Economic Review, Elsevier, vol. 17(1), pages 99-113. [Downloadable!] (restricted)
  5. Lerman, Robert I. & Yitzhaki, Shlomo, 1984. "A note on the calculation and interpretation of the Gini index," Economics Letters, Elsevier, vol. 15(3-4), pages 363-368. [Downloadable!] (restricted)
  6. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-55, June. [Downloadable!] (restricted)
  7. Yitzhaki, Shlomo, 1994. "Economic distance and overlapping of distributions," Journal of Econometrics, Elsevier, vol. 61(1), pages 147-159, March. [Downloadable!] (restricted)
  8. Silber, Jacques, 1989. "Factor Components, Population Subgroups and the Computation of the Gini Index of Inequality," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 107-15, February. [Downloadable!] (restricted)
  9. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November. [Downloadable!] (restricted)
  10. Dagum, Camilo, 1980. "Inequality Measures between Income Distributions with Applications," Econometrica, Econometric Society, vol. 48(7), pages 1791-1803, November. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Stéphane Mussard & Françoise Seyte & Michel Terraza, 2006. "La décomposition de l’indicateur de Gini en sous-groupes : une revue de la littérature," Cahiers de recherche 06-11, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
  2. Peter J. Lambert & Andre Decoster, 2004. "The Gini Coefficient Reveals More," University of Oregon Economics Department Working Papers 2004-18, University of Oregon Economics Department, revised 05 Dec 2004. [Downloadable!]
    Other versions:
  3. Essama-Nssah, B., 2002. "Assessing the distributional impact of public policy," Policy Research Working Paper Series 2883, The World Bank. [Downloadable!]
  4. Mary C. King, 2002. "Strong Families or Patriarchal Economies? Southern European Labor Markets and Welfare in Comparative Perspective," EUI-RSCAS Working Papers 14, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS). [Downloadable!]
  5. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Edward N. Wolff & Ajit Zacharias, 2007. "Class Structure and Economic Inequality," Economics Working Paper Archive wp_487, Levy Economics Institute, The. [Downloadable!]
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