The Relativity of Decreasing Inequality Between Countries

Abstract

We study the evolution of population‐weighted between‐country inequality in the period 1980–2009. Whereas previous studies almost exclusively focused on relative inequality measures, we consider relative, absolute and intermediate versions of the Lorenz dominance criterion and of the S‐Gini and generalized entropy classes of inequality measures. The analysis yields robust evidence for increasing absolute inequality. Moreover, this conclusion is preserved for intermediate views substantially in the direction of the relative view. In contrast, robust evidence for decreasing inequality—be it relative, absolute or intermediate—is virtually absent. These findings challenge the widely accepted claim of decreasing between‐country inequality.