Evaluating Global Inequality Using Decomposition Approach.

Abstract

Given that there is no recent research on decomposition for global inequality, the aim of this study is to fill the gap in the literature by investigating global inequality with decomposition technique. The data of this study were compiled from the World Bank and decomposition by subgroups was conducted to evaluate the driving forces behind the evolution of inequality. Almost all the countries in the world were included in this study, and the study period spans from 2000 to 2017. The analysis was carried out in several stages to evaluate the issue of North–South divide, as well as the impacts of regional and income subgroups. There are several salient findings derived from this study. First, the results show that there was a gradual decline of international inequality within the study period. Second, there was still a large disparity between the developed and developing countries, and the inequality within the developing countries has aggravated further. Third, geographical location has exerted great impacts on global inequality and East Asia contributed about 40% to the overall decline in international inequality. Fourth, decline in inequality amongst the upper-middle-income countries also contributed substantially to the fall in international inequality. The results derived from this paper can provide pertinent information for the formulation of a comprehensive and coherent strategy in coordinating international efforts and managing inequality while promoting human development under the framework of the newly established Sustainable Development Goals.