Global income inequality - World Bank Group

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Oct 15, 2013 - because of globalization, role of social media and political (crony) ..... against country dummies “exp
Global income inequality: current trends and future developments Branko Milanovic, Lead Economist Policy Research Talk October 15, 2013 World Bank Development Research Group Washington, DC Branko Milanovic

A. National inequalities mostly increased

Branko Milanovic

Ginis in 1988 and twenty years later 1988

2008

Change

Average Gini

36.0

38.5

+2.5

Pop-weighted Gini GDP-weighted Gini Countries with higher Ginis (38)

33.9

37.3

+3.4

32.2

36.4

+4.2

33.7

38.5

+4.8

Countries with lower Ginis (20)

40.5

37.7

-2.7

From final-complete3.dta and key_variables_calcul2.do

Branko Milanovic

Ginis in 1988 and 2008 60

HND COL

BOL

BRA

PRY

40

NGA

LKA CHN-R

USA ISRCIV

DOM CRI URY ARGMYS SLV UGA PHL

IND-U

IDN-U PRT CANKOR GBR JOR POL FRA GRC BGD ITA JPN DEU EGY ESP IDN-RIND-R PAK IRL NLD BGRBEL AUT FIN HUN DNK CZE SVK SVN LVA

CHL MEX

VEN

THA MRT TUR

CHN-U

Branko Milanovic

20

30

Gini in 2008

50

ECU

20

From key_variables_calcul3.do

30

40 Gini in 1988

50

60

60

Ginis in 1988 and 2008 (population-weighted countries)

BRA

MEX USA

40

RUS

CHN-R

CHN-U

IND-U

30

Gini in 2008

50

NGA

IND-R 20

Branko Milanovic

20

From key_variables_calcul3.do

30

40 Gini in 1988

50

60

70

Inequality and income, 1950-2012

50

China

Russia

40

United States

30

Gini coefficient

60

Brazil

1000 5000 10000 GDP per capita in PPP dollars

Use fc:…\finance_and_development\figure2.do Use gdpppppreg4.dta

40000

Issues raised by growing national inequalities • Inequality as one of the causes of the global financial crisis. • Real inequality greater than measured inequality because rich people refuse to participate in surveys and hide their income and assets (growing issue) • Perception of inequality outstrips real increase because of globalization, role of social media and political (crony) capitalism (example of Egypt) • The effect on the political system Branko Milanovic

Difficult to explain developments using a single theory

Branko Milanovic

No downward portion plotted against time or income: example of China 1964-2007 Against time

45 40 35 30

30

35

40

45

50

Against income

1960

1970

1980 1990 2000 year when the survey was conducted

Combined Gini coefficient

Fitted values

twoway (scatter Giniall year if contcod=="CHN" & year>1960, connect(l) ylabel(30(5)45)) (qfit Giniall year if contcod=="CHN" & year>1960) Based on giniall.dta

2010

0

2000 4000 6000 constant 2005 ppp, based on icp05 Gini from my allGini file

8000

Fitted values

twoway (scatter Giniall gdpppp if contcod=="CHN" , connect(l) ylabel(30(5)50)) (qfit Giniall gdpppp if contcod=="CHN") From global_new2.dta

30

30

35

35

40

40

45

45

50

No downward portion plotted against time or income: example of the USA, 1950-2010

10000

1940

1960 1980 2000 year when the survey was conducted

twoway (scatter Giniall year if contcod=="USA", connect(l) ylabel(30(5)45)) (qfit Giniall year if contcod=="USA" & year>1960, legend(off)) From allginis.dta.

2020

20000 30000 40000 gdpppp 2005 icp; for years