What is Really Happening with Global Inequality?

Abstract

We use the latest available data from the World Income Inequality Database 3.4 and the Penn World Tables 9.0 to examine some of the core issues and concerns that have animated research on global inequality. We begin by reviewing the evidence on trends in within-country inequality, drawing out some of the implications of this for our thinking about inequality and economic development. We examine between-country inequality, computing updated estimates of trends in both unweighted and population-weighted between-country inequality. The data reveal that inequality between countries increased across the latter half of the twentieth century, then turned to decline measurably thereafter. We show that this decline is robust to a range of methodological and measurement decisions identified as important in previous research. We then examine estimates of true global inequality, situating these in relation to lower- and upper-bound estimates of global inequality. We conclude by noting the critical and contested role of globalization in inequality reduction.