The global income distribution for high-income countries

Abstract

This paper presents the global income distribution between all individuals living in the developed world. Global inequality for the group of high-income countries, as measured by the Gini coefficient, stands at 37 in 2013 and has increased by almost 3 Gini points since the mid-1990s. This was mainly driven by top 10% incomes growing more than middle and lower incomes and the bottom 10% falling behind. Rising inequality within the United States drives almost half of the inequality increase among high-income countries, a combination of a sizeable rise in inequality and a population share around a third in the sample. The broad global middle in high-income countries, located from the 10th to the 90th percentile, experienced strikingly similar disposable income growth, but at a very slow annualised rate around 0.5%. Robustness analyses show that this low-growth result is sensitive to declining real incomes in Japan and that scaling micro-based incomes to national accounts means, to include in-kind transfers such as healthcare and educational services, lifts measured household income growth substantially. Finally, the paper delivers a methodological contribution by decomposing the global growth incidence curve into within- and between-country components, allowing for a more granular assessment of the development than is possible by decomposing inequality indices. The decomposition shows that between-country income differences contributed little to growing inequality in the group of high-income countries.