Decomposing World Income Distribution: Does the World Have a Middle Class?

46 Pages Posted: 20 Apr 2016

See all articles by Branko Milanovic

Branko Milanovic

World Bank - Development Research Group (DECRG); University of Maryland

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Date Written: March 31, 2001

Abstract

Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by region(countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality within countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil's), and the middle-income countries (those with per capita income between Brazil's and Italy's). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

Keywords: Inequality, Poverty Impact Evaluation, Governance Indicators, Rural Poverty Reduction, Services & Transfers to Poor

Suggested Citation

Milanovic, Branko, Decomposing World Income Distribution: Does the World Have a Middle Class? (March 31, 2001). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2001. Available at SSRN: https://ssrn.com/abstract=1082645

Branko Milanovic (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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HOME PAGE: http://econ.worldbank.org/staff/bmilanovic

University of Maryland ( email )

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College Park, MD 20742
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