Updated World Income Distribution

Brookings Institute updated its analysis of global income distribution. They were able to get more complete data for more countries. They updated the purchasing power parity to 2011 statistics.

Income inequality data is more mixed.

Looking at 146 countries that report survey data in at least two years since 2000, only 50 show a deterioration in the Gini coefficient, while the remainder have an improvement. In 50 countries, the change in the Gini averaged less than 1 percentage point in a decade.

They had three observations.

1. They remain optimistic that the world is a better place for more and more people, and that the real global story is now one of steady improvement in global income distribution; between-country and within country convergence both appear to be widespread in the global economy. They find no evidence yet that major structural forces in the world economy, such as globalization or technology change, are driving income distribution outcomes in an unfair way in all countries.

They remain concerned about prospects for the very poor in fragile states, for those in middle-income countries that seem trapped and for those in countries where income distribution is shifting rapidly to the top.

2. They would encourage the use of national data, not global data, when attempting to explain a country’s social and political trends. The world is not yet so integrated that global trends render national policies irrelevant.

3. They advise extreme caution in interpreting top incomes and in mixing data between surveys and tax administration sources. Both have limitations, and are of different quality and relevance in different parts of the world.