IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/6719.html
   My bibliography  Save this paper

Global income distribution : from the fall of the Berlin Wall to the great recession

Author

Listed:
  • Lakner, Christoph
  • Milanovic, Branko

Abstract

The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of top incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent. With such an adjustment the downward trend in the Gini almost disappears. Tracking the evolution of individual country-deciles shows the underlying elements that drive the changes in the global distribution: China has graduated from the bottom ranks, modifying the overall shape of the global income distribution in the process and creating an important global"median"class that has transformed a twin-peaked 1988 global distribution into an almost single-peaked one now. The"winners"were country-deciles that in 1988 were around the median of the global income distribution, 90 percent of whom in terms of population are from Asia. The"losers"were the country-deciles that in 1988 were around the 85th percentile of the global income distribution, almost 90 percent of whom in terms of population are from mature economies.

Suggested Citation

  • Lakner, Christoph & Milanovic, Branko, 2013. "Global income distribution : from the fall of the Berlin Wall to the great recession," Policy Research Working Paper Series 6719, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6719
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/12/11/000158349_20131211100152/Rendered/PDF/WPS6719.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Vladimir Hlasny & Paolo Verme, 2018. "Top Incomes and the Measurement of Inequality in Egypt," World Bank Economic Review, World Bank Group, vol. 32(2), pages 428-455.
    2. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
    3. Van Kerm, Philippe, 2009. "Income mobility profiles," Economics Letters, Elsevier, vol. 102(2), pages 93-95, February.
    4. Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2009. "Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data," Working Papers 09-26, Center for Economic Studies, U.S. Census Bureau.
    5. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
    6. Rao, Vijayendra, 2000. "Price Heterogeneity and "Real" Inequality: A Case Study of Prices and Poverty in Rural South India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 201-211, June.
    7. Pinkovskiy, Maxim L., 2013. "World welfare is rising: Estimation using nonparametric bounds on welfare measures," Journal of Public Economics, Elsevier, vol. 97(C), pages 176-195.
    8. Frankel, David M. & Gould, Eric D., 2001. "The Retail Price of Inequality," Journal of Urban Economics, Elsevier, vol. 49(2), pages 219-239, March.
    9. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
    10. Carr-Hill, Roy, 2013. "Missing Millions and Measuring Development Progress," World Development, Elsevier, vol. 46(C), pages 30-44.
    11. Jonathan D. Fisher & David S. Johnson & Timothy M. Smeeding, 2013. "Measuring the Trends in Inequality of Individuals and Families: Income and Consumption," American Economic Review, American Economic Association, vol. 103(3), pages 184-188, May.
    12. Mistiaen, Johan A. & Ravallion, Martin, 2003. "Survey compliance and the distribution of income," Policy Research Working Paper Series 2956, The World Bank.
    13. Leigh, Andrew & van der Eng, Pierre, 2009. "Inequality in Indonesia: What can we learn from top incomes?," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 209-212, February.
    14. Kopczuk, Wojciech & Slemrod, Joel & Yitzhaki, Shlomo, 2005. "The limitations of decentralized world redistribution: An optimal taxation approach," European Economic Review, Elsevier, vol. 49(4), pages 1051-1079, May.
    15. Anthony B. Atkinson & Andrea Brandolini, 2010. "On Analyzing the World Distribution of Income," World Bank Economic Review, World Bank Group, vol. 24(1), pages 1-37, January.
    16. François Bourguignon & Christian Morrisson, 2002. "Inequality Among World Citizens: 1820-1992," American Economic Review, American Economic Association, vol. 92(4), pages 727-744, September.
    17. Ms. Camelia Minoiu & Sanjay Reddy, 2008. "Kernel Density Estimation Based on Grouped Data: The Case of Poverty Assessment," IMF Working Papers 2008/183, International Monetary Fund.
    18. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    19. Cowell, Frank A. & Flachaire, Emmanuel, 2007. "Income distribution and inequality measurement: The problem of extreme values," Journal of Econometrics, Elsevier, vol. 141(2), pages 1044-1072, December.
    20. Branko Milanovic, 2012. "Global inequality recalculated and updated: the effect of new PPP estimates on global inequality and 2005 estimates," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(1), pages 1-18, March.
    21. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2013. "Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income," American Economic Review, American Economic Association, vol. 103(3), pages 173-177, May.
    22. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
    23. Michael Grimm, 2007. "Removing the anonymity axiom in assessing pro-poor growth," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(2), pages 179-197, August.
    24. Angus Deaton & Olivier Dupriez, 2011. "Purchasing Power Parity Exchange Rates for the Global Poor," American Economic Journal: Applied Economics, American Economic Association, vol. 3(2), pages 137-166, April.
    25. Dirk Krueger & Fabrizio Perri, 2006. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 163-193.
    26. George Alessandria & Joseph P. Kaboski, 2011. "Pricing-to-Market and the Failure of Absolute PPP," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 91-127, January.
    27. Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
    28. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins & Jeff Larrimore, 2012. "Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 371-388, May.
    29. Sudhir Anand & Paul Segal, 2008. "What Do We Know about Global Income Inequality?," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 57-94, March.
    30. Segal, Paul, 2011. "Resource Rents, Redistribution, and Halving Global Poverty: The Resource Dividend," World Development, Elsevier, vol. 39(4), pages 475-489, April.
    31. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2004. "Do the Rich Save More?," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 397-444, April.
    32. Martin Ravallion, 2010. "Understanding PPPs and PPP-Based National Accounts: Comment," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 46-52, October.
    33. Anton Korinek & Johan Mistiaen & Martin Ravallion, 2006. "Survey nonresponse and the distribution of income," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 33-55, April.
    34. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    35. 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.
    36. Jonathan Haskel & Robert Z. Lawrence & Edward E. Leamer & Matthew J. Slaughter, 2012. "Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 119-140, Spring.
    37. Jagdish N. Bhagwati, 2004. "In Defense of Globalization: It Has a Human Face," Rivista di Politica Economica, SIPI Spa, vol. 94(6), pages 9-20, November-.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christoph Lakner & Branko Milanovic, 2015. "La distribución global del ingreso. De la caída del muro de Berlín a la gran recesión," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 17(32), pages 71-128, January-J.
    2. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers 0151, CEDLAS, Universidad Nacional de La Plata.
    3. Clare Leaver & Paul Segal, 2014. "The Global Distribution of Income," Economics Series Working Papers 714, University of Oxford, Department of Economics.
    4. Pinkovskiy, Maxim L., 2013. "World welfare is rising: Estimation using nonparametric bounds on welfare measures," Journal of Public Economics, Elsevier, vol. 97(C), pages 176-195.
    5. Vladimir Hlasny & Paolo Verme, 2017. "The impact of top incomes biases on the measurement of inequality in the United States," Working Papers 452, ECINEQ, Society for the Study of Economic Inequality.
    6. Dhongde, Shatakshee & Minoiu, Camelia, 2013. "Global Poverty Estimates: A Sensitivity Analysis," World Development, Elsevier, vol. 44(C), pages 1-13.
    7. La-Bhus Fah Jirasavetakul & Christoph Lakner, 2020. "The Distribution of Consumption Expenditure in Sub-Saharan Africa: The Inequality Among All Africans," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 29(1), pages 1-25.
    8. Anthony B. Atkinson & Andrea Brandolini, 2010. "On Analyzing the World Distribution of Income," World Bank Economic Review, World Bank Group, vol. 24(1), pages 1-37, January.
    9. Miguel Niño‐Zarazúa & Laurence Roope & Finn Tarp, 2017. "Global Inequality: Relatively Lower, Absolutely Higher," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 661-684, December.
    10. Vladimir Hlasny & Paolo Verme, 2018. "Top Incomes and Inequality Measurement: A Comparative Analysis of Correction Methods Using the EU SILC Data," Econometrics, MDPI, Open Access Journal, vol. 6(2), pages 1-21, June.
    11. Jordá, Vanesa & Niño-Zarazúa, Miguel, 2019. "Global inequality: How large is the effect of top incomes?," World Development, Elsevier, vol. 123(C), pages 1-1.
    12. Martin Ravallion, 2018. "What might explain today’s conflicting narratives on global inequality?," WIDER Working Paper Series 141, World Institute for Development Economic Research (UNU-WIDER).
    13. Thomas Goda, 2013. "Changes in income inequality from a global perspective: An overview," Working Papers PKWP1303, Post Keynesian Economics Society (PKES).
    14. Martin Ravallion, 2018. "What might explain today's conflicting narratives on global inequality?," WIDER Working Paper Series wp-2018-141, World Institute for Development Economic Research (UNU-WIDER).
    15. Vladimir Hlasny & Paolo Verme, 2018. "Top Incomes and the Measurement of Inequality in Egypt," World Bank Economic Review, World Bank Group, vol. 32(2), pages 428-455.
    16. François Bourguignon, 2018. "Simple adjustments of observed distributions for missing income and missing people," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 171-188, June.
    17. Shaohua Chen & Martin Ravallion, 2010. "The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1577-1625.
    18. Roope, Laurence & Niño-Zarazúa, Miguel & Tarp, Finn, 2018. "How polarized is the global income distribution?," Economics Letters, Elsevier, vol. 167(C), pages 86-89.
    19. Nora Lustig, 2016. "Commitment to Equity Handbook. A Guide to Estimating the Impact of Fiscal Policy on Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 1301, Tulane University, Department of Economics.
    20. Nora Lustig, 2020. "The ``missing rich'' in household surveys: causes and correction approaches," Working Papers 520, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    Keywords

    Inequality; Economic Theory&Research; Poverty Impact Evaluation; Rural Poverty Reduction; Emerging Markets;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6719. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.