Empirics of World Income Inequality

TLDR

The study uses a general inequality‑index formula to examine whether intercountry income inequality has risen or fallen, the role of differing population growth rates and large nations, and the robustness of these findings across multiple inequality measures. It finds that divergent population growth rates between rich and poor countries drive changes in global income inequality, that the long‑term rise in inequality stalled between 1960 and 1989, and that the dependency‑theory explanation of a polarizing world system is not supported.

Abstract

This article employs a common general formula for inequality indexes to answer several basic questions about intercountry income inequality in recent decades: Has inequality across nations increased or declined (and why have earlier studies yielded mixed results)? Have different rates of population growth played a significant role in the trend? Have large nations dominated the trend? Are the results robust over different inequality measures and different income series? Two findings stand out. First, different rates of population growth in rich and poor nations played the predominant role in determining change in the distribution of per capita income across nations. Second, the centuries‐old trend of rising inequality leveled off from 1960 to 1989. The dependency theory thesis of a polarizing world system receives no support.