Evolution of the Global

Income Inequality, 1970-2015

Yuri Dikhanov

World Bank

Présenté par:

Mr. Michel WARD

Expert des Nations Unies

Global inequality consists of within-nation and international components

Global distribution is based on 45 countries representing 5/6 of population and income

Income from household surveys is augmented to Personal Consumption Expenditures

National distributions converted using PPPs Quasi-exact approximation of distribution f-n (with

cubic polynomials)

Assumptions for 2015

Growth rates from the 90s are maintained for 2000-2015 (except for Africa and Eastern Europe)

National distributions are frozen at the 2000 level

VARIOUS GLOBAL INEQUALITY CHARACTERISTICS

changes

 1970-

801980-

90

1990-200

0 2000-15

1970-2000

cumulative

Gini-coefficient 0.014 0.004 -0.001 -0.031 0.016

Theil index 1 0.057 -0.032 -0.043 -0.109 -0.018

Theil index 2 0.040 0.030 0.021 -0.093 0.090

Income less than mean 0.010 0.023 0.027 -0.015 0.060

Decile ratio 11.30 0.19 -0.41 -7.87 11.08

absolute levels

  1970 1980 1990 2000 2015

Gini-coefficient 0.668 0.681 0.685 0.684 0.653

Theil index 1 0.996 1.053 1.021 0.978 0.869

Theil index 2 0.822 0.862 0.891 0.912 0.819

Income less than mean 0.705 0.716 0.738 0.765 0.751

Decile ratio 92.28 103.58 103.77 103.36 95.49

Income Levels by Decile, 1970-2015

18,89522,808

27,057 30,08136,476

8,3489,964 10,800 10,901

13,619

4,999 5,682 5,676 5,129

7,263

2,778 2,920 2,879 2,926

4,468

1,404 1,4781,723

2,002

3,103

878 9571,213

1,477

2,289

630 696901

1,115

1,713

470 519673

829

1,256

343 376478

577

844

205 220261 291

382

100

1,000

10,000

100,000

1970 1980 1990 2000 2015

1999

PP

P d

olla

rs Decile 10

Decile 9

Decile 8

Decile 7

Decile 6

Decile 5

Decile 4

Decile 3

Decile 2

Decile 1

Decomposition of inequality using Theil II index

  1970 1980 1990 2000 2015

Within-country inequality 0.211 0.220 0.230 0.275 0.278

25.7% 25.5% 25.8% 30.2% 33.9%

Between-country inequality 0.610 0.642 0.661 0.637 0.541

  74.3% 74.5% 74.2% 69.8% 66.1%

WORLD INCOME DISTRIBUTION, 1970

OECD

EAP

LAC

ECE

AFRSAS

(0.500)

(0.450)

(0.400)

(0.350)

(0.300)

(0.250)

(0.200)

(0.150)

(0.100)

(0.050)

0.000

income in1999 Int. Dollars

Den

sity

INCOME

OECD

EAP

LAC

ECE

AFR

SAS

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

100

126

160

202

256

323

409

517

654

827

1,04

6

1,32

2

1,67

2

2,11

4

2,67

4

3,38

1

4,27

6

5,40

7

6,83

7

8,64

6

10,9

34

13,8

26

17,4

84

22,1

09

27,9

59

35,3

55

44,7

09

56,5

37

71,4

94

90,4

08

114,

326

144,

572

182,

819

231,

186

Den

sity

POPULATION

WORLD INCOME DISTRIBUTION, 2000

OECD

EAP

LAC

ECE

AFRSAS

(0.450)

(0.400)

(0.350)

(0.300)

(0.250)

(0.200)

(0.150)

(0.100)

(0.050)

0.000

income in1999 Int. Dollars

Den

sity

INCOME

OECD

EAPLAC

ECEAFR

SAS

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

100

126

160

202

256

323

409

517

654

827

1,04

6

1,32

2

1,67

2

2,11

4

2,67

4

3,38

1

4,27

6

5,40

7

6,83

7

8,64

6

10,9

34

13,8

26

17,4

84

22,1

09

27,9

59

35,3

55

44,7

09

56,5

37

71,4

94

90,4

08

114,

326

144,

572

182,

819

231,

186

Den

sity

POPULATION

WORLD INCOME DISTRIBUTION, 2015

OECD

EAP

LAC

ECE

AFRSAS

(0.450)

(0.400)

(0.350)

(0.300)

(0.250)

(0.200)

(0.150)

(0.100)

(0.050)

0.000

income in1999 Int. Dollars

Den

sity

INCOME

OECD

EAP

LACECE

AFR

SAS

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

100

126

160

202

256

323

409

517

654

827

1,04

6

1,32

2

1,67

2

2,11

4

2,67

4

3,38

1

4,27

6

5,40

7

6,83

7

8,64

6

10,9

34

13,8

26

17,4

84

22,1

09

27,9

59

35,3

55

44,7

09

56,5

37

71,4

94

90,4

08

114,

326

144,

572

182,

819

231,

186

Den

sity

POPULATION

Regional composition of global income distribution, by percentile, 1970

EAP LAC

OECD

ECE

AFR

SAS

0%

20%

40%

60%

80%

100%

1% 4% 7% 10%

13%

16%

19%

22%

25%

28%

31%

34%

37%

40%

43%

46%

49%

52%

55%

58%

61%

64%

67%

70%

73%

76%

79%

82%

85%

88%

91%

94%

97%

Percentiles of global income distribution

Reg

ion

al c

om

po

siti

on

of

glo

bal

per

cen

tile

s

EAP

LACOECD

ECE

AFR

SAS

0%

20%

40%

60%

80%

100%

1% 4% 7% 10%

13%

16%

19%

22%

25%

28%

31%

34%

37%

40%

43%

46%

49%

52%

55%

58%

61%

64%

67%

70%

73%

76%

79%

82%

85%

88%

91%

94%

97%

Percentiles of global income distribution

Reg

ion

al c

om

po

siti

on

of

glo

bal

per

cen

tile

s

Regional composition of global income distribution, by percentile, 2000

Regional composition of global income distribution, by percentile, 2015

EAP

LACOECD

ECE

AFR

SAS

0%

20%

40%

60%

80%

100%

1% 4% 7% 10%

13%

16%

19%

22%

25%

28%

31%

34%

37%

40%

43%

46%

49%

52%

55%

58%

61%

64%

67%

70%

73%

76%

79%

82%

85%

88%

91%

94%

97%

Percentiles of global income distribution

Reg

ion

al c

om

po

siti

on

of

glo

bal

per

cen

tile

s

Evolution of Global Income Distribution, 1970-2015, trace for each percentile

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

100 1,000 10,000 100,0001999 PPP Dollars

20001970

2015

Income growth by percentile of global population, 1970-2015

-20%

-10%

0%

10%

20%

30%

40%

50%1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97

percentile

1980-701990-802000-902015-00

(0.40)

(0.35)

(0.30)

(0.25)

(0.20)

(0.15)

(0.10)

(0.05)

-

100

1,0

00

10,0

00

100,0

00

1,0

00,0

00

-0.050.100.150.200.250.300.350.40

100

1,0

00

10,0

00

100,0

00

1,0

00,0

00

Regional income distributions:example of Africa, 2000

Income transfer

Assumptions: Poverty gap 39% (20.6% of world population below

PPP $700) 5% of the wealthiest transfer 2.8% of their total

income or 8.1% of marginal income (1.04% of world income - $350 bln. in PPP terms or $150 bln. in exchange rate terms) to cover the poverty gap;

Transfer is made to the people below PPP $1,400, with marginal rate 19.6%.

WORLD INCOME DISTRIBUTION, before and after a hypothetical income transfer

Characteristics(estimation)

bef

ore

tr

ansf

er

afte

r tr

ansf

er

Income share: Decile 1 0.5% 0.9% Decile 2 1.0% 1.4% Decile 3 1.5% 1.7% Decile 4 2.1% 2.2% Decile 5 2.7% 2.7% Decile 6 3.7% 3.7% Decile 7 5.3% 5.3% Decile 8 9.2% 9.2% Decile 9 19.6% 19.6% Decile 10 54.3% 53.3%Upper boundary, decile 1 435 624 Upper boundary, decile 2 686 826 Upper boundary, decile 3 952 1,040 Upper boundary, decile 4 1,270 1,293 Median/ Upperboundary, decile 5 1,690 1,690

Upper boundary, decile 6 2,333 2,333 Upper boundary, decile 7 3,552 3,552 Upper boundary, decile 8 6,916 6,916 Upper boundary, decile 9 15,107 15,108 Upper boundary, decile 10 1,000,000 923,092 Gini-coefficient 0.6825 0.6652Theil index 0.9704 0.8695Theil index 2 0.9066 0.8623Variance (std.) 1.9123 1.8492Mode income 633 744Mean Income 5371 5371

Income less than mean 0.7669 0.7669Decile ratio 103.926 57.181

CONDITIONS

marginal reception rate 19.6% for people below $1,400 threshold ($2-a-day)

marginal surrender rate 8.1% for the richest 5%

(0.450)

(0.350)

(0.250)

(0.150)

(0.050)

0.050

0.150

0.250

0.350

10 100 1,000 10,000 100,000 1,000,000

Fx

Lx

Fx

Lx

(0.450)

(0.350)

(0.250)

(0.150)

(0.050)

0.050

0.150

10,000 100,000 1,000,000

Fx

Lx

Fx

Lx

Ends of the global distribution, before and after the hypothetical transfer

(0.450)

(0.350)

(0.250)

(0.150)

(0.050)

0.050

0.150

10,000 100,000 1,000,000

Fx

Lx

Fx

Lx

(0.250)

(0.150)

(0.050)

0.050

0.150

0.250

0.350

0.450

100 1,000 10,000

Fx

Lx

Fx

Lx