On the Evolution of the World Income Distribution

Abstract

The post-World War II period has seen substantial changes in the distribution of GDP per worker around the world. In the upper half of the distribution, a number of countries have exhibited large increases in income relative to the richest countries. In the bottom half, several countries have seen incomes fall relative to the richest countries. The net result of these changes is a movement in the shape of the world income distribution from something that looks like a normal distribution in 1960 to a bi-modal "twin-peaks" distribution in 1988. Projecting these changes into the future suggests a number of interesting findings. First, it seems likely that the U.S. will lose its position as the country with the highest level of GDP per worker. Second, growth miracles have been more common in recent decades than growth disasters. If these dynamics continue, the future income distribution will involve far more "rich" countries and far fewer "poor" countries than currently observed.

JEL Classification: E23, O47