We use aggregate GDP data and within-country income shares for the
period 1970-1998 to assign a level of income to each person in the
world. We then estimate the gaussian kernel density function for the
worldwide distribution of income. We compute world poverty rates by
integrating the density function below the poverty lines. The $1/day
poverty rate has fallen from 20% to 5% over the last twenty five years.
The $2/day rate has fallen from 44% to 18%. There are between 300 and
500 million ...
We use aggregate GDP data and within-country income shares for the
period 1970-1998 to assign a level of income to each person in the
world. We then estimate the gaussian kernel density function for the
worldwide distribution of income. We compute world poverty rates by
integrating the density function below the poverty lines. The $1/day
poverty rate has fallen from 20% to 5% over the last twenty five years.
The $2/day rate has fallen from 44% to 18%. There are between 300 and
500 million less poor people in 1998 than there were in the 70s.
We estimate global income inequality using seven different popular
indexes: the Gini coefficient, the variance of log-income, two of
Atkinson s indexes, the Mean Logarithmic Deviation, the Theil index
and the coefficient of variation. All indexes show a reduction in global
income inequality between 1980 and 1998. We also find that most global
disparities can be accounted for by across-country, not within-country,
inequalities. Within-country disparities have increased slightly during
the sample period, but not nearly enough to offset the substantial
reduction in across-country disparities. The across-country reductions
in inequality are driven mainly, but not fully, by the large growth rate
of the incomes of the 1.2 billion Chinese citizens. Unless Africa starts
growing in the near future, we project that income inequalities will
start rising again. If Africa does not start growing, then China, India,
the OECD and the rest of middle-income and rich countries diverge away
from it, and global inequality will rise. Thus, the aggregate GDP growth
of the African continent should be the priority of anyone concerned with
increasing global income inequality.
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