Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession

62 Pages Posted: 20 Apr 2016

See all articles by Christoph Lakner

Christoph Lakner

World Bank - Development Research Group (DECRG); University of Oxford - Department of Economics

Branko Milanovic

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

Date Written: December 1, 2013

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.

Keywords: Inequality, Economic Theory & Research, Poverty Impact Evaluation, Rural Poverty Reduction, Emerging Markets

Suggested Citation

Lakner, Christoph and Milanovic, Branko, Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession (December 1, 2013). World Bank Policy Research Working Paper No. 6719. Available at SSRN: https://ssrn.com/abstract=2366598

Christoph Lakner (Contact Author)

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

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HOME PAGE: http://www.worldbank.org/en/about/people/christoph-lakner

University of Oxford - Department of Economics

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Manor Road
Oxford, OX1 3BJ
United Kingdom

Branko Milanovic

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

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-6968 (Phone)
202-522-1153 (Fax)

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

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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