Gue ie o, A hu Zi o; Kapelle , Jakob
Wo king Pape
The global pe spec i e on income inequali y
i so wo king pape , No. 35
P o ided in Coope a ion wi h:
Uni e si y o Duisbu g-Essen, Ins i u e o Socioeconomics (i so)
Sugges ed Ci a ion: Gue ie o, A hu Zi o; Kapelle , Jakob (2024) : The global pe spec i e on income
inequali y, i so wo king pape , No. 35, Uni e si y o Duisbu g-Essen, Ins i u e o Socio-Economics
(i so), Duisbu g
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i so wo king pape
A hu Zi o Gue ie o
Jakob Kapelle
The Global Pe spec i e on
Income Inequali y
2024 no.35
The Global Pe spec i e on
Income Inequali y
1
A hu Zi o Gue ie o
Uni e si y Duisbu g-Essen, Ins i u e o
Socio-Economics
RWI – Leibniz-Ins i u ü
Wi scha s o schung e.V.
a hu .gue[email p o ec ed]
Jakob Kapelle
Uni e si y Duisbu g-Essen, Ins i u e o
Socio-Economics
Johannes Keple Uni e si y Linz, Ins i u e
o Comp ehensi e Analysis o he
Economy (ICAE)
jakob.kapel[email p o ec ed]
Abs ac
This pape p o ides a comp ehensi e o e iew o he ongoing deba e on global
income inequali y. I shows ha global income inequali y is a aluable analy ical
concep ha signi ican ly enhances ou unde s anding o global economic dynamics.
By add essing key me hodological issues in he measu emen o global income
inequali y, he pape compa es di e en da ase s used in he li e a u e and conduc s
an explo a o y analysis o ecen ends. This analysis e-e alua es he ela i e
impac o inequali y be ween and wi hin coun ies and highligh s how g ow h and
dis ibu ional dynamics in speci ic coun ies in luence global income inequali y.
Keywo ds: income inequali y, globaliza ion, measu emen o inequali y, con e gence
JEL Codes: D31, F01, F60
1
The p esen wo king pape is a d a o a chap e o be published in he book: Wimme , Ch is ophe /
Riede , Tobias (eds.), Global Inequali y, B ill.
2
1. In oduc ion
Economic inequali y is a opic o g owing in e es no only among academics
bu also in popula deba e. Inequali y is a key p ope y s uc u ing ou economic
sys em which is di ec ly linked o no ions o jus ice and ela ed conce ns on how ou
socie y should be o ganized. I is he e o e essen ial o unde s and inequali y
concep ually and o measu e i empi ically. Al hough his is usually done by aking
coun ies as uni s o analysis, a g owing s eam in he cu en li e a u e is in e es ed
in aking a global pe spec i e and analyzing economic dispa i ies be ween all
indi iduals in he wo ld, ega dless o whe e hey li e.
Inequali y be ween he wo ld's ci izens is es ima ed o be e y high. To illus a e,
he op 0.1% (a g oup o a ound 790 housand people) and he bo om 50% (a ound
3.8 billion people) enjoy a simila sha e o o al global income, namely abou 8%.
Mo eo e , global inequali y oday is es ima ed o be a le els compa able o 1900
(Chancel e al., 2022), a pe iod in wo ld his o y cha ac e ized by coloniza ion and
impe ial domina ion o a la ge pa o he wo ld, combined wi h a s iking di ide
be ween a ising class o indus ialis s and he mise y o a la gely impo e ished
wo king class.
This a icle aims o p o ide an o e iew o he s a e o he a in his ield. Fi s ,
we aise he ques ion whe he i is ele an o s udy inequali y a he global le el. We
de end he impo ance o analyzing global economic inequali y and p esen i as an
essen ial objec o s udy ha is ele an om bo h a desc ip i e as well as a no ma i e
poin o iew.
On his basis, we discuss me hodological challenges ele an o he
measu emen o global inequali y. The ocus o his a icle is on income. We ecognize
ha such a ocus on income is no su icien o unde s and he mul idimensional
p ope ies o inequali y (The bo n, 2014). Howe e , income is none heless a key ac o
o conside o dis ibu ional analysis, and, in addi ion, one ha e eals much abou
global his o y and he con empo a y geo-economic cons ella ions. This impo ance o
measu es o global income inequali y o unde s anding wo ld his o y and i s
geopoli ical dynamics is illus a ed in he hi d sec ion o he a icle, which p esen s he
main ends in global income inequali y be ween 1820 and 2020 and makes explici
3
how hese dynamics ela e o he o e all his o ical de elopmen s wi hin his pe iod.
Bo h inequali ies be ween and wi hin coun ies a e discussed.
Recen de elopmen s in global inequali y a e discussed in mo e de ail in he
inal sec ion. O pa icula in e es is he ole o China in he ecen decline in global
income inequali y, which began a ound 1980 and con inued un il a leas 2020.
Al hough he e is a consensus in he li e a u e ha s anda d measu es o inequali y
ell du ing his pe iod, he in e p e a ion o his end is s ill deba ed. The high g ow h
a es in China, which we e he main d i e o he decline in inequali y, will soon ha e
he opposi e e ec , as China ha e al eady o will soon su pass hose h esholds,
below which highe g ow h in he coun y can con ibu e o a decline in global
inequali y.
2. The impo ance o he global pe spec i e
Al hough he opic o income inequali y has ecei ed addi ional a en ion in
ecen decades (G isold & Theine, 2017), he e is s ill no consensus ha income
inequali y should be measu ed a he global le el. Indeed, o many au ho s, global
inequali y is a spu ious concep and i s measu emen a supposedly meaningless
cons uc . Some impo an philosophe s, such as Rawls (1993), a gue ha he
in e na ional dis ibu ion is no subjec o mo al claims o edis ibu ion. Simila ly, some
au ho s ind i meaningless o compa e indi iduals o di e en “socie ies” (Bhagwa i,
2004). The e o e, i is impo an o jus i y ha i cons i u es a alid objec o s udy.
Indeed, mos a gumen s denying he scien i ic o p ac ical ele ance o
measu ing global income inequali y a e based on some e sion o he assump ion ha
di e en coun ies ep esen di e en socie ies ha a e undamen ally dis inc and
sepa a e and, hence, o be ea ed in isola ion. Unde such a p emise, i would make
li le sense o summa ize he dispa i ies o all indi iduals in a single measu e o
inequali y. As isola ed socie ies, i would be di icul o a gue ha he e is any injus ice
in he dis ibu ion o esou ces ac oss hese socie ies. A bes , a measu e o inequali y
would e lec dispa i ies in well-being ha migh a ouse he cu iosi y o some.
Howe e , such a p emise does no hold up o sc u iny: we do no li e in a wo ld
o sepa a e socie ies. A leas since he coloniza ion o he Ame icas, and hen o
4
almos all egions o he wo ld, he economic ies and dependencies ha bind di e en
pa s o he globe oge he a e so s ong ha i is di icul o de end he idea ha each
coun y is an isola ed communi y, wi h pe haps only a ew mino excep ions.
The e a e s ill good easons o analyze coun ies sepa a ely, as hey
none heless e ain some key ea u es, like e i o ial in eg i y o ins i u ional
homogenei y. Howe e , he e a e many aspec s o economic eali y ha would emain
hidden when ocusing only on indi idual coun ies. Fo one, he expansion o
in e na ional ade in he pas cen u ies has been accompanied by a pa h-dependen
co-e olu ion o complemen a y specializa ion pa e ns ha make indi idual
de elopmen al ajec o ies o coun ies depend on he o e all de elopmen o he
global economy (e.g. G äbne e al., 2020; Hidalgo & Hausmann, 2009; Walle s ein,
2004) .Fo ano he , p ice shocks o in e na ionally aded p oduc s, such as oil o o he
p ima y esou ces, a ec all coun ies a he same ime ( hough in di e en
ways).Mo eo e , due o he globaliza ion p ocesses, p oduc ion chains a e dispe sed
ac oss coun ies, and la ge i ms ha e a g ea deal o eedom o globally eloca e
p oduc ion si es, headqua e s, dis ibu ional in as uc u e and he like. Local wages
(and incomes) a e he e o e embedded in global dynamics o a “ ace o he bes
loca ion” (Rod ik, 2011), which is why we canno ully unde s and a coun y's economy
(and i s income dis ibu ion) wi hou aking in o accoun he in e na ional con ex in
which i is embedded.
Finally, i could be a gued ha i is poin less o s udy global inequali y because
he e is no global poli ical en i y ha could edis ibu e income globally and p o ide he
mo al amewo k o claims o jus ice. In indi idual coun ies, i is possible o use
measu es o inequali y as indica o s o p og ess. The goal o educing inequali y can
hen lead o di e en policies. Bu a he global le el, he e is no global s a e ha could
in oduce edis ibu i e policies. E en i in e na ional o ganiza ions such as he Wo ld
Bank claim o igh global inequali y, hei scope o ac ion is e y limi ed and ce ainly
does no ha e he dis ibu i e powe ha a na ional s a e could ha e.
Al hough he e is no global s a e, he e a e nume ous ins i u ional a angemen s
in he global economy, including ade ag eemen s, pa en laws, global heal h
ini ia i es and inancial ou ines ega ding he ea men o accumula ed deb (Anand
& Segal, 2015) and so on. Fo some philosophe s (Pogge, 1994), he exis ence o
hese in e na ional o ganiza ions jus i ies dis ibu ional claims in much he same way
5
ha na ion-s a es jus i y edis ibu ion wi hin he coun y. Mo eo e , Pogge (2010)
a gues ha he igh s o he poo a e iola ed by he in e na ional o de . Fo him, global
po e y is he esul o global ins i u ions in which ich coun ies a e di ec ly in ol ed.
In his case, whe e ich coun ies a e pe cei ed as being esponsible o he mise y o
o he s, i seems clea ha some mo al obliga ions a e implied, a leas o s op he
unjus ela ions ha s ill exis .
The economic in e ac ion be ween people li ing in di e en coun ies is
impo an om a no ma i e pe spec i e, because exploi a ion and economic
domina ion can exis in e na ionally. The clea es example o his is colonialism, a
condi ion in which he en i e economy o a colony is subo dina ed o he in e es s o
he me opole (Bhamb a, 2020). A leas in his case, he e is a s ong a gumen o
conside ing he inequali ies be ween he people li ing in hese coun ies. I would be
di icul o jus i y ha an indus ialis in England and a peasan in colonized India in he
19 h cen u y belonged o comple ely isola ed socie ies and ha i is meaningless o
conside a measu e ha akes his dimension in o accoun . The ac ha hese wo
indi iduals li ed a apa geog aphically does no necessa ily imply ha he inequali y
be ween hem is negligible. In his case, he e a e e en good a gumen s o ejec ing
he idea o measu ing inequali y only among English ci izens, because his would hide
a la ge pa o he inequali y in his colonial socie y as a whole.
Today, mos o me colonies ha e al eady gained hei independence, and
pa e ns o in e na ional domina ion/exploi a ion do no appea as clea -cu as in
colonial imes.
Howe e , many au ho s a gue ha he nega i e consequences o colonialism
no only con inue o in luence cu en de elopmen s bu a e compounded by o he
unjus aspec s o in e na ional poli ical and economic ela ions. Fo example, Hickel e
al. (2021) es ima e ha coun ies in he Global No h app op ia e $2.2 illion (cons an
2011 dolla s) in goods and se ices om he Global Sou h each yea due o unequal
exchange.
Fu he mo e, i is possible o a gue ha ich coun ies (o , al e na i ely, hose
coun ies esponsible o colonial opp ession) should make some epa a ions o o me
colonies o undo he his o ical injus ices associa ed wi h hei cu en economic
ad an ages. Since colonial his o y has an impo an impac on he cu en global
6
dis ibu ion o income and weal h, he e may e en be a case o in e na ional
edis ibu ion, whe e a simila a gumen can be made wi h ega d o he consequences
o clima e change and he dis ibu ion o cumula i e emissions o e ime (Fanning &
Hickel, 2023).
The pu pose o his a icle is no o e alua e he soundness o claims abou he
alleged injus ice o he global economic sys em, bu o illus a e ha esponding o
ela ed e hical ques ions o in e na ional jus ice canno be esol ed by philosophical
inqui y alone, bu equi es his o ical con ex ualiza ion and empi ical analysis. Thus,
he measu emen o global inequali y plays an impo an ole in his discussion by
p o iding empi ical da a ha can be used o illus a e o suppo di e en posi ions on
he ma e .
The e o e, measu ing global inequali y is indeed meaning ul because i
ep esen s an impo an aspec o he economic sys em ha can be ela ed o o he
a iables o in e es . I opens up a new pe spec i e o unde s anding he wo ld's
economic his o y and e eals some undamen al aspec s o how he globe has
changed o e ime. I ela es o dis ibu ional s uggles, poli ical and economic shi s
wi hin coun ies, and he ise and all o di e en coun ies and empi es.
3. Measu ing Global Income Inequali y
As we a gued in he las sec ion, global income inequali y is wo h s udying.
Howe e , i is a b oad concep ha can be analyzed om many di e en angles.
Quan i ying global inequali y is an impo an s ep owa ds a be e unde s anding o
he phenomenon. Bu o measu e inequali y, i is essen ial o speci y how his concep
is de ined and ope a ionalized.
Rega dless o how we measu e global income inequali y, i appea s o be e y
high – as high o highe han in he mos unequal egions o he wo ld. Es ima es o
he global Gini-coe icien , a s anda d measu e o inequali y anging om ze o (pe ec
equali y) o one (absolu e inequali y), in 2020 ange om 0.6 (G adín, 2021a;
Milano ic, 2024) o 0.67 (Chancel & Pike y, 2021) and 0.71 (Milano ic, 2024). In his
sec ion, some impo an aspec s o he measu emen o inequali y a e add essed, no
only o explain his la ge a iabili y, bu also o cla i y how hese di e en es ima es
7
should be in e p e ed. Much o he eason is ha “global income inequali y” is s ill a
e y b oad concep ha needs o be u he speci ied in o de o be measu ed, and he
di e en igu es e e o di e en concep s.
The p esen a icle ocuses on income, al hough his app oach ce ainly does
no exhaus all dimensions o inequali y ha may be o in e es . In addi ion o income,
we a e usually in e es ed in a ange o ac o s ha in luence he well-being (The bo n,
2014), capabili ies (Nussbaum, 2005) and oppo uni ies o indi iduals which a e no
e ec i ely cap u ed by income alone. In addi ion o he componen s o he b oade
concep o social inequali y (such as heal h, educa ional a ainmen , pe sonal
ne wo ks, s a us, e c.), also o he dimensions o economic inequali y (such as
inequali y in weal h o eely disposable ime) canno be cap u ed by only looking a
income. Ne e heless, income dis ibu ion con ains much in o ma ion abou he
economic s uc u e o he wo ld and is an impo an dimension o global his o y.
Al hough incomple e, i is a aluable sou ce o knowledge ha should no be
neglec ed. Fo he sake o a concise analysis, we ha e chosen o ocus on his
dimension alone.
3.1. Da a sou ces
The e is no su ey o compa able da a sou ce ha collec s income da a di ec ly
a he global le el. The e o e, compu ing global inequali y equi es he combina ion o
da a om di e en su eys. Un o una ely, he concep s used by di e en su eys a e
no always di ec ly compa able. Mo eo e , each o hese su eys con ains sou ces o
bias. The e o e, he es ima es p esen in he li e a u e mus be in e p e ed wi h ca e
and small a ia ions in he indices should no be o e in e p e ed.
An impo an compila ion o da a is p o ided by he Wo ld Income Inequali y
Da abase (WIID), which in eg a es household su eys om di e en coun ies wi h
na ional accoun s h ough a de ailed ha moniza ion p ocess desc ibed by G adín
(2021b, 2021c). The WIID da a ep esen disposable income in 2017 in e na ional
dolla s, using pu chasing powe pa i y (PPP) exchange a es o accoun o p ice le el
di e ences ac oss coun ies. Mo eo e , i includes es ima ions o he mean income o
each pe cen ile o nea ly all coun ies om 1950 o 2021, acili a ing a comp ehensi e
14
3.4. Decomposing Global Inequali y: Be ween and Wi hin Coun ies
In line wi h ecen li e a u e, we unde s and global inequali y as inequali y
among wo ld ci izens ega dless o whe e hey li e. This cosmopoli an concep ion o
inequali y, called “concep 3” by Milano ic (2016), s ands in con as o mo e adi ional
app oaches, which assess in e na ional inequali y by inspec ing dispa i ies be ween
he a e age incomes o di e en coun ies (“concep 1”), which can also be weigh ed
by popula ion size (“concep 2”). An al e na i e o his somewha dicho omic app oach
is o conside he ele ance o na ional en i ies by decomposing global inequali y in o
inequali y be ween coun ies and inequali y wi hin coun ies.
The e a e se e al ways o echnically de ine hese concep s, bu pe haps he
mos e ealing is o measu e inequali y using he Theil-L index (also called mean log
de ia ion). This measu e is addi i ely decomposable, meaning ha o al inequali y can
be exp essed as he sum o be ween-coun y inequali y, i.e he inequali y be ween
a e age na ional incomes weigh ed by popula ion, and wi hin-coun y inequali y, i.e.
he weigh ed a e age o wi hin-coun ies inequali y (Sho ocks, 1980). Simila ly, i is
possible o p ojec he same in ui ion o o he inequali y measu es, such as he Gini
index o he T10/B50 a io, al hough in such cases a clean decomposi ion in he sense
ha be ween-coun y and wi hin-coun y componen s add up o o al inequali y can
o en no be achie ed. In hese cases, he be ween-coun y componen can be
cons uc ed by assigning each indi idual he a e age income o he coun y, while he
wi hin-coun y componen is calcula ed by escaling he incomes o di e en coun ies
o make all a e age na ional incomes equal, wi hou changing he ela i e dis ibu ion
wi hin coun ies.
15
Figu e 2: Decomposi ion o global inequali y. The se ies om Milano ic (2024) e e s o he Theil
index. The be ween-coun y componen om Chancel and Pike y (2021) is he a io T10/B50 be ween
he a e age incomes o he op 10% and he bo om 50% (assuming ha e e y indi idual wi hin a coun y
has he same income). The wi hin-coun y componen om Chancel and Pike y (2021) is he a io
T10/B50 be ween he a e age incomes o he op 10% and he bo om 50% (assuming all coun ies ha e
he same a e age income)
Figu e 2 shows he decomposi ion o global inequali y using di e en da a
sou ces. The ajec o ies o he be ween-coun y componen appea o be e y clea ,
ising con inuously om 1820 o 1980/1990 and hen alling un il 2020. The e also
seems o be a consensus ha he wi hin-coun y componen ose un il he beginning
o he 20 h cen u y and hen ell. Howe e , he ajec o y a e 1980 depends on he
da a used. While Chancel and Pike y (2021) show an inc ease om 1980 and a
s abiliza ion in he mid-2000s, Milano ic (2024) shows a a he cons an inequali y
wi hin coun ies a e 1980. This di e ence is a consequence o he adjus men s made
by WID using ax and adminis a i e da a, which end o show a sha pe inc ease in
inequali y wi hin coun ies o e his pe iod han su ey da a alone.
Mo eo e , he au ho s do no ag ee on he exac impo ance o each
componen . As shown in Figu e 3, Chancel and Pike y (2021) es ima e he sha e o
he be ween-coun y componen in he o e all global inequali y o be only 32% in 2020
while Milano ic (2024) es ima es i o be 55%, al hough he o e all end o he sha es
16
is simila . These di e ences ollow om he ac ha he da a employed by Chancel
and Pike y (2021) lead o la ge es ima es o inequali y obse ed wi hin coun ies.
Figu e 3: Sha e o be ween-coun y componen in o e all global inequali y as measu ed by a
pe cen age o Theil-L
The es ima ion o di e en sha es o each componen may none heless
mo i a e di e en app oaches o how o be e mi iga e global inequali y. Milano ic
(2024) s ess he impo ance o he be ween-coun y componen , dedica ing a g ea
pa o his analysis o discussing g ow h ends o di e en coun ies. On he o he
hand, Chancel and Pike y (2021) gi e mo e impo ance o wi hin-coun y inequali ies,
s essing ha he educ ion o global inequali y equi es also he educ ion o inequali y
wi hin coun ies.
4. Wha has happened wi h global inequali y since 1820?
In e p e ing le els o inequali y is di icul , whe he a he global o na ional le el.
E en i we use mo e in ui i e measu es o inequali y han he Gini, such as op sha es,
i is di icul o de ine wha le el o inequali y should be conside ed “high” o “low”
wi hou compa ing i o o he dis ibu ions. The e is mo e scope o analysis i we ocus
17
no on le els bu on ends. P o ided we ha e compa able de ini ions o e ime, ime
dynamics can be iden i ied e en i he e is unce ain y abou he exac in e p e a ion
o le els. Al hough he quali y o he da a a he global le el does no allow
in e p e a ion o small changes, some long- e m ends can be iden i ied ha a e
obus o many di e en assump ions and de ini ions.
Al hough he e is some consensus in he li e a u e abou he e olu ion o
inequali y in he nine een h cen u y, he e is some impo an disag eemen abou he
wen ie h cen u y. Al hough he cu en li e a u e ag ees ha wi hin-coun y inequali y
ell be ween 1910 and 1980/1990, while be ween-coun y inequali y con inued o ise
un il 1980/1990 and hen ell, he e is no consensus on he o e all e ec o hese
con adic o y o ces. This sec ion p esen s he di e en posi ions and explains how
hei di e ences a e oo ed in he me hodological choices made by di e en au ho s.
4.1. Main ends in wi hin and be ween coun y inequali y
The dynamics o global inequali y in he 19 h cen u y seem e y clea . A a ime
when some coun ies in Eu ope and No h Ame ica we e indus ializing a a high a e,
he gap be ween hese apidly de eloping coun ies and he es o he wo ld was
widening ma kedly. A he same ime, inequali ies wi hin hese coun ies inc eased as
he gap be ween a weal hy bou geoisie and an impo e ished wo king class widened.
The 19 h cen u y was also cha ac e ized by he colonial empi es o Eu opean
coun ies. In a con ex in which some coun ies exe cised di ec powe o e o he s and
managed o eign economies o hei own bene i , i is also na u al ha inequali y
be ween coun ies inc eased. This pe iod is o en called he “G ea Di e gence” and
is well documen ed his o ically (Pome anz, 2000).
Al hough he income da a o his pe iod a e o e y poo quali y, he e a e
se e al au ho s who p o ide es ima es o global inequali y om 1820 onwa ds
(Bou guignon & Mo isson, 2002; Chancel & Pike y, 2021; Milano ic, 2024). The
di ec ion o he end is clea and in line wi h he his o ical in ui ion – o ins ance, da a
p esen ed by Milano ic (2024) shows a sha p inc ease in he Gini coe icien om 0.5
in 1820 o 0.69 in he 1990s, as shown in Figu e 1.
The ajec o y o global inequali y in he wen ie h cen u y equi es a mo e
de ailed discussion, as bo h equalizing and disequalizing o ces we e a wo k
18
simul aneously, and di e en au ho s a i e a di e en in e p e a ions o he pe iod.
The i s hal o he wen ie h cen u y was ma ked by a se ies o in ense changes ha
eshaped he balance o powe be ween capi al and labo . The wo Wo ld Wa s
des oyed and de alued much o he capi al s ock in Eu opean coun ies, while o cing
many coun ies o in oduce highe and mo e p og essi e axa ion o inance he cos s
o wa .
In addi ion, e olu iona y e en s occu ed ha led o a p ocess o edis ibu ion
unp eceden ed in his o y. The 1917 e olu ion in Russia and he con inued expansion
o socialism in o he coun ies in he ollowing decades we e a powe ul o ce in
educing inequali y wi hin coun ies. No only because socialis coun ies ca ied ou a
adical edis ibu ion o income wi hin hei bo de s, bu also because i inc eased he
p essu e o edis ibu ion wi hin capi alis coun ies. Agains he h ea o socialis
e olu ion, mo e p og essi e policies gained s eng h along wi h he ba gaining powe
o he wo king class. This was pa icula ly ue in he decades a e he Second Wo ld
Wa , when wel a e policies we e in oduced in many coun ies a ound he wo ld,
hough mo e in ensi ely in Eu ope (Scheidel, 2017).
While inequali y wi hin coun ies declined, inequali y be ween coun ies is
es ima ed o ha e con inued o ise du ing and a e he wa s (Milano ic, 2024;
Chancel & Pike y, 2021), as shown in Figu e 2. Al hough many coun ies in he global
Sou h gained hei independence du ing his pe iod and colonial empi es began o all,
i ook se e al decades o he newly libe a ed na ions o eco e om hei s uggles
o independence and in e nal con lic s and o o mula e e ec i e de elopmen plans
(Chancel & Pike y, 2021). Meanwhile, i was a pe iod o apid g ow h in he No h.
A e 1980, bo h he be ween-coun y and wi hin-coun y componen s mo ed in
opposi e di ec ions: inequali ies be ween coun ies began o decline, mainly because
o high g ow h a es in Asia, while inequali ies wi hin coun ies inc eased, a leas when
using WID da a, which a e conside ed o be o be e quali y han pu e su ey da a
because hey ake in o accoun he mis epo ing o na ional op incomes.
The ajec o y o bo h componen s has o en been explained by globaliza ion,
which in ensi ied apidly du ing his pe iod. This idea was a he cen e o wo impo an
books published by p ominen au ho s, Milano ic (2016) and Bou guignon (2015).
T ade libe aliza ion opened up he possibili y o Asian coun ies o de elop expo -led
19
g ow h, while economic openness has been linked o he ise in inequali y wi hin
coun ies (Be gh & Nilsson, 2010).
P obably one o he mos amous g aphs in his li e a u e is he one published
by Lakne and Milano ic (2016), commonly called he “elephan cu e”. I shows he
ela i e income g ow h o each global pe cen ile be ween 1988 and 2008, he pe iod
a e he all o he So ie Union and be o e he inancial c isis. Fou messages a e
clea om his g aph: (i) he e y bo om o he dis ibu ion had almos no g ow h; (ii)
he middle o he dis ibu ion had signi ican gains; (iii) he gains o he 75 h-90 h
pe cen iles we e also e y educed; (i ) he e y op o he dis ibu ion enjoyed
compa ably high g ow h a es.
Acco ding o Milano ic's a gumen , he winne s we e bo h an eme ging “middle
class” in he de eloping wo ld (especially China), loca ed in he middle o he global
income dis ibu ion, and he e y ich, which we e concen a ed in he Global No h.
The adi ional (lowe ) middle class o he ich coun ies, on he o he hand, was seen
as he lose o he p ocess, a g oup co esponding o he 75 h-90 h pe cen iles o he
global dis ibu ion. The wo king class o he ich coun ies gained new compe i o s wi h
g ea e economic openness, which dep essed hei eal-wage g ow h and inc eased
unemploymen . This p ocess can be seen as he coun e pa o he educ ion o
inequali y be ween coun ies, as he jobs los in he ich coun ies we e gained in less
de eloped egions, especially in China.
Ra allion (2018a) c i icizes he in e p e a ion o he “Elephan Cu e” because
bo h he e ec o he collapse o he So ie Union and he s agna ion o Japan in he
pe iod a e no commen ed by Milano ic, while Co le (2016) shows ha one o he
main ea u es o he g aph, he low g ow h in he 75 h-90 h pe cen iles, disappea s
when hese wo ac o s a e emo ed om he calcula ions.
The e y complexi y o he dynamics in ol ed and he agueness o he concep
o “globaliza ion” make i di icul o con i m he ela ionship be ween his concep and
global inequali y. Ra allion (2018a), o example, claims ha globaliza ion can be
associa ed wi h ising inequali y in some coun ies (Be gh & Nilsson, 2010), bu no all
– in some o he coun ies, economic openness has been associa ed wi h alling
inequali y.
20
As Al a edo e al. (2018) a gue, we canno unde s and he dis ibu ional
dynamics o he pe iod as a mechanical consequence o globaliza ion and
echnological change. Policies and ins i u ions play an impo an ole in shaping
obse ed ajec o ies. Some ac o s ha a e o en ela ed o he ising inequali y wi hin
coun ies du ing his pe iod should be men ioned sepa a ely. The i s is he ise o
neolibe al policies leading o massi e de egula ion o labo and inancial ma ke s, he
educ ion o he p og essi i y o axes and he wel a e s a e. This was e y clea no
only in he ich wo ld wi h he so-called “Reagan-Tha che e olu ion” bu also in many
o he egions, including he shi o a de egula ed economy in India and he
in oduc ion o a ma ke economy in China.
Figu e 4 shows he g ow h incidence cu e o di e en pe iods using WIID
da a. The Elephan shape can be iden i ied be ween 1980 and 2000. A e 2000, a
main cha ac e is ic o he g aph om Lakne and Milano ic (2016) – he elephan ’s
unk – is no isible anymo e, as he highe a es in op pe cen iles do no appea .
Figu e 4: Global g ow h incidence cu e o he espec i e pe iods. Own calcula ions using WIID
da a.
To he same ex en ha he socialis e olu ions educed inequali y wi hin
coun ies, bo h h ough di ec edis ibu ion and h ough he ise o wo king-class
21
powe in o he coun ies, he all o he So ie Union led o a signi ican inc ease in
inequali y wi hin coun ies, no only bu also because “shock he apy” libe aliza ion in
Russia ook he coun y om one o he mos egali a ian o one o he mos unequal in
he wo ld. The ansi ion o a ma ke economy in China also led o a sha p inc ease in
inequali y in ha coun y (Cla k, 2023; Hung & Kucinskas, 2011).
Al hough he e was a gene al end o ising inequali y wi hin coun ies, he e
we e excep ions. In pa icula , income inequali y in he Middle Eas , B azil, and sub-
Saha an A ica was ela i ely s able, albei a e y high le els (Al a edo e al., 2018).
E en wi hin Eu ope, some coun ies, such as Belgium, F ance, G eece, Hunga y and
Spain, expe ienced a decline in inequali y du ing some pe iods (A kinson & Mo elli,
2014).
A e 1980/1990, he be ween-coun y componen o global inequali y declined.
The impo ance o Chinese g ow h o his end o ma e ialize has been emphasized
epea edly in he ela ed li e a u e (Alde son & Pandian, 2018; Anand & Segal, 2008;
Hickel, 2017; Sala-i-Ma in, 2006). Since i is a e y populous coun y, home o a big
sha e o he wo ld's popula ion, any changes in (a e age) income in China ha e a
di ec impac on he shape o he global dis ibu ion. Gi en ha China's g ow h a es
ha e been consis en ly highe han he wo ld a e age since he 1980s, wi h
excep ionally high a es o 8.8% p.a. be ween 2000 and 2020
2
, and aking in o accoun
ha China was a ela i ely poo coun y in he 1980s, i s impac on he de elopmen
o global inequali y du ing his pe iod does no come as a su p ise.
O he Asian coun ies also closed he gap wi h he ich wo ld. India plays a e y
impo an ole because i is also a e y populous coun y and i s g ow h a es ha e
been highe han he global a e age. While his means ha India con ibu ed o he
educ ion in inequali y, i s impac was much smalle han ha o China. India's g ow h
was much lowe han China's and mo e in line wi h he global ajec o y, meaning ha
incomes in he coun y g ew a simila a es o he pa s o he global dis ibu ion o
which i belonged. Calcula ing global inequali y wi hou India does no change he
o e all end o global inequali y, only he le el. In con as , emo ing China om he
calcula ions has a majo impac on he obse ed ajec o y (Gue ie o, 2024).
2
Calcula ions using WIID da a.
22
The downwa d end in be ween-coun y inequali y go ano he push wi h he
2008 inancial c isis. While ich coun ies we e hi ha d by his shock, de eloping
coun ies expe ienced smalle losses. China and India con inued o g ow a high a es,
and Milano ic (2021) es ima es ha wo- hi ds o he decline in global income
inequali y be ween 2008 and 2013 can be a ibu ed o hese wo coun ies.
While he e is b oad ag eemen in he li e a u e on he di ec ion o ends in
inequali y, bo h wi hin and be ween coun ies, he o e all e ec o hese wo opposing
o ces is s ill deba ed. Milano ic (2024) iden i ies h ee e as o global inequali y: in he
i s e a global inequali y inc eased om 1820 o 1950 as bo h wi hin- and be ween-
coun y inequali y ose, while in he second e a om 1950 o 1990 global inequali y
s agna ed a a e y high le el. Finally, om 1990 o 2020, inequali y declined due o
he ise o Asia. In con as , Chancel and Pike y (2021) iden i y only wo pe iods.
These au ho s ag ee on he pe iod o di e gence in he 19 h cen u y bu a gue ha
global inequali y s abilized in 1910 and has con inued a a e y high le el un il he
p esen . Al hough hese au ho s also ind a decline in some measu es o inequali y
(bu no all) in he pe iod 2000 o 2020, hey do no conside his o be signi ican
enough o label i a speci ic e a. Acco ding o he au ho s, i is oo ea ly o say whe he
his educ ion will con inue in he u u e.
One eason o his disag eemen is ha he WID da a poin o a highe
con ibu ion o wi hin-coun y inequali y o global inequali y (due o co ec ions o
na ional op incomes using ax da a and na ional accoun s), while his componen is
o less impo ance in Milano ich's da a. The e o e, he ajec o y o inc easing o al
inequali y un il 1950 and a decline a e 1990, which is mainly d i en by he be ween-
coun y componen , as ound by Milano ic, does no appea in he WID da a (as can
be seen in Figu e 1), because he o ce o he wi hin-coun y componen , which ac s
in he opposi e di ec ion, gains mo e weigh when measu ed wi h he WID da a, whe e
he inc ease in wi hin-coun y inequali y since 1980 is e y p onounced, while i is
almos in isible in Milano ic's da a.
23
4.2. Inequali y educ ion om 2000 o 2020
The decline in s anda d measu es o global inequali y om 1990 (o a leas since
2000) o 2020 is well documen ed and obus o di e en measu es and di e en
choices among a ailable da a sou ces (Alde son & Pandian, 2018). Howe e , he
in e p e a ion o his pe iod is s ill an open deba e.
Al hough hey do no desc ibe i as an e a o alling inequali y, Chancel and
Pike y (2021) also p esen da a showing a decline in global inequali y o e his pe iod.
Howe e , he au ho s claim ha global inequali y has been s able since 1910. This
in e p e a ion is based on wo hings. Fi s , he decline ound in hei da a seems o be
less p onounced han in he da a p esen ed by o he au ho s, such as Milano ic
(2024). While hese au ho s ind a dec ease o 0.05 Gini poin s ( om 0.72 o 0.67),
Milano ic (2024) es ima es a dec ease o 0.1 Gini poin s ( om 0.7 o 0.6), as shown
in Figu e 1. Mo eo e , Pike y and Chancel unde s and his pe iod as pa o a longe
his o ical p ocess. Compa ed o he ise in inequali y be ween 1820 and 1910, his
decline seems small. I only co e s a pe iod o 20 yea s, and i is no clea whe he
his p ocess will con inue in he u u e.
Mo eo e , while his decline in global inequali y can be obse ed using s anda d
measu es o inequali y such as he Gini, Theil-L o op10/bo om50 income sha es,
his is no he case o all measu es. Fo example, he op 1% sha e o global income
emained ai ly cons an o e he pe iod, d opping only om 21.7% in 2000 o 20.7%
in 2020 (Chancel & Pike y, 2021). This means ha he edis ibu ion did no a ec he
e y ich and was limi ed o he middle o he global dis ibu ion. Mo eo e , he bo om
o he global dis ibu ion did no expe ience high g ow h a es. Thus, he in e p e a ion
o he pe iod depends on how much weigh we gi e o he wo ex emes o he
dis ibu ion.
A e y di e en ajec o y o global inequali y is ound when absolu e measu es
o inequali y a e used, wi h global inequali y ising since he beginning o he da a
se ies. This ac ha has ecei ed an inc easing a en ion in he ecen li e a u e
(A kinson & B andolini, 2010; G adín, 2021a; Niño-Za azúa e al., 2017; Ra allion,
2018b).
30
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