नवम्बर 19, 2024
लेखक WID.world

Inequality in 2024: a closer look at six regions

For more than 10 years, the World Inequality Lab has been working to produce data on income inequality, now covering 216 countries, with data going back as far as 1820 to 2023 for some countries. Each year, the regional coordinators work with a global network of researchers and statistical agencies to improve and expand these data series.

In 2023, the World Inequality Database shows that income inequality varies significantly across regions. Below, we’ll zoom in on six regions.

 

Europe, the least unequal region in the world

  • To this day, Europe remains the least unequal world region, with the 10% earners making 36% of national income. And yet, inequality has increased in Western Europe in the last two decades, but at a much slower pace than in the United States, for example, where the top 10% earn 45% of total income.
  • Romania and Bulgaria remain the most unequal countries in Eastern Europe, with the top 10% earning over 40% of national income.
  • Iceland, the Czech Republic and Slovakia are the most equal countries in Europe. The Czech Republic and Slovakia have seen their income inequality decrease since the 2008 financial crisis. The top 10% earn under 30% of national income, making these two countries the most equal in Europe.
  • Income inequality has been steadily increased in the United Kingdom since the 1980s. At the time of Brexit, the bottom 50% of the population was earned under 20% of national income.
  • The top 1% share in France has quickly recovered in recent years, now exceeding the pre-2008 financial crisis levels. Despite a slight slowdown in the growth of the top 1% share, inequalities in France remain at their highest levels since World War II.

To explore further:

 

The United States, the outlier in North America and Oceania

  • Pre-tax inequality in the United States remains far higher than other advanced economies of the OECD, reaching a post-WWII peak in 2023, where the richest 10% of the population earns 47% of national income, compared to 34% in 1980.
  • In Canada, inequality is slightly higher than in Australia, with the top 10% earning 36% of national income. Inequality is now slightly lower than it was at its 2008 high (38% for the top 10%), but far higher than during the 1970s and even into the mid-1980s. In 1985, the top 10% of earners earned 29% of national income. During the pandemic, post-tax income inequality initially fell with large temporary transfer programs, but pre-tax income inequality has increased since then.
  • Within Canada, Ontario has consistently had higher inequality than Quebec, although the gap has closed in recent years. Quebec has the most progressive tax and transfer system. Alberta has been Canada’s most unequal province, with the least progressive fiscal system among the provinces.
  • New estimates in New Zealand reveal a relatively volatile trend in inequality over the past two decades. Inequality peaked in the early 2000s, with the top 10% controlling 41% of national income in 2010. By 2023, this share had decreased to 35%, but it remains above 1980s levels, when the top 10% earned 31% of national income.
  • In Australia, pre-tax inequality has slightly declined since its peak around 2010. The top 10% now earn 33% of national income, down from 35% in 2014 but still far above the 24% share seen in 1979.

To explore further:

 

In Asia, a stark contrast between India’s extreme inequality and Japan’s lower levels

  • In March 2024, the WIL released a groundbreaking study on inequality in India showing that “The “Billionaire Raj” is now more unequal than the British colonial Raj”. The study sparked months of debate on growth, income and wealth inequality in India, making headlines not only in the Indian press but also across the world. The study found that inequality skyrocketed since the early 2000s: the share of income held by the top 10% has risen from 40% in 2000 to 58% in 2023, driven primarily by the top 1%, whose share grew from 15% to 23%, while the middle 40% saw a decline from 39% to 27%.
  • A recent paper reveals that Japan has one of the lowest income inequalities among East Asian countries (compared to China, Taiwan and South Korea). The share of income held by the top 10% has risen only slightly, from 20% in 1980 to 26% in recent years.

To explore further:

 

The impact of sanctions on inequality in the Middle East

  • The Middle East remains highly unequal and new data suggests this trend persists. In 2023, the top 1% of income earners earned 23.7% of the total income, the top 10% earned 56.8%, the bottom 50% earned 10.7%, and the middle 40% earned 32.4%.
  • The new micro-data for Iran and Iraq suggests interesting sanctions-related trends. Sanctions targeting the financial sector exclusively affect mainly top earners. After the financial sanctions imposed on Iran in 2007, both the top 1% and top 10% earners lost 3 percentage points of their income share in 2008 with an effect that persisted for a few years. The financial sanctions of 2013 had a similar but less strong effect. Sanctions that target the economy as a whole affect mostly the share of lower income earners. Following the 1995 sanctions on Iran, the bottom 50’s share of income decreased; this decrease stopped in 2000 when some of these sanctions were eased.

  • In Iraq, inequality decreased after the lifting of sanctions in end of 2010, with inequality remaining high. In 2010, the top 1% earned 25% of the total income, the top 10% earned 54%, bottom 50% earned 14%. In 2013, the top 1% earned 16%, the top 10% earned 45%, bottom 50% earned 17%.
  • In Turkey, the new data shows a post-Covid trend of increased inequality. In 2023, the top 1% and top 10% income shares increased to 23.9% and 55.5%, while the bottom 50% and middle 40% saw declines, holding 14% and 30.3% of income, respectively.

 

Latin America, where in-kind transfers play a key role in reducing inequality

  • Thanks to access to new administrative data, the quality of inequality statistics has improved for Brazil, Chile, and Colombia. The updated data confirms that Brazil, Chile, Peru, Colombia, and Mexico exhibit some of the highest levels of inequality in Latin America and in the world, with the richest 10% of their populations capturing 60% of national income.
  • Enhanced administrative data, alongside household surveys and national accounts, enables a more comprehensive analysis of COVID-19’s impact on inequality across countries, with data available through 2022 for Brazil and 2021 for Chile and Colombia. The data highlights a marked increase in health expenditure during COVID-19, particularly at the onset of 2019–2020. Investments in sanitary measures and vaccine procurement were especially notable in Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, and Mexico.

  • The post-tax national income series, introduced two years ago, has been further expanded. These post-tax figures reveal lower levels of income concentration than pre-tax data, primarily due to increased public spending on in-kind transfers, especially in health and education. This reduction underscores the crucial role of social policies and government intervention in addressing income disparities. As expected, countries with more advanced tax systems—such as Argentina, Brazil, Chile, and Uruguay—show a more pronounced decline in inequality post-tax.

  • Revisions in data reporting, including Ecuador’s separate reporting of Operating Surplus and Mixed Income and updated tax data for Colombia, have led to adjusted inequality measures, often indicating higher inequality levels in certain countries, including Brazil, Peru, Colombia, and Ecuador.
  • Adjustments to survey weights in Chile and integrating of new national accounts data for Uruguay (2016–2019) have yielded more precise inequality estimates, better aligning the series with recent census data and enabling comprehensive annual reporting. This adjustment reflects a higher income share for the bottom 50% in Chile, suggesting lower levels of inequality, particularly for groups better captured in surveys.

To explore further:

 

From West Africa to Southern Africa, Africa’s inequality divide

  • Sub-Saharan Africa is often described as one of the poorest regions in the world, but less often as one of the most unequal. However, with the richest 10% capturing 55% of the national income and the top 1% earning 20%, it ranks among the most unequal regions in the world.
  • This is driven by extremely unequal countries such as South Africa, where 10% of the population holds around 65% of total national income, while other countries in West Africa. In contrast, Guinea, Mauritania, Guinea-Bissau, Nigeria, Liberia, Gabon, Benin, and Cote d’Ivoire are close to the levels of the most unequal European countries (Bulgaria, Romania and Poland), where the share of the top 10% is around 40%.

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