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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
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    References listed on IDEAS

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    Keywords

    Inequality; Economic Theory&Research; Poverty Impact Evaluation; Rural Poverty Reduction; Emerging Markets;
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