November 10, 2020
Written by WID.world

Global Inequality Data – 2020 update

 

Global Inequality Data - World Inequality Lab

 

 

The World Inequality Lab releases today a major update of inequality data for 173 countries, making up 97% of the world population and 7.5 billion people. The data published distributes economic growth within each country making it possible to track inequality and poverty over time, countries and regions. These results are based on the Distributional National Accounts methodology developed by the World Inequality Lab and its international network of researchers, in collaboration with the United Nations.

 

 

What’s new in the World Inequality Database?

The World Inequality Database incorporated new estimates for almost 50 additional countries, bringing the total to 173 nations covered. Our data also covers a more extended period of time, as well as, for each country income estimates for the entire distribution, from the poorest 1% to the richest 0.001%. The data goes up to late 2019, giving a precise picture of the state of global inequality right before the pandemic.

>> Click here to access the global and regional inequality data

General overview on inequality worldwide

 

  • The Middle East and Latin America stand as the world’s most unequal regions, with the top 10% of the income distribution capturing respectively 56% and 54% of the average national income. In Latin America, amidst a decline of inequality levels in a handful of countries, inequality persisted, and even increased, in some others. In the Middle East, Gulf countries (Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia) have been marked extreme inequality levels with little variation since the 1990s.

 

  • Africa comes next as one of the world’s most unequal regions, with the top 10% capturing half of national income. Contrary to widespread view, there is no equality Africa exceptionalism, its inequality levels are very close to those of Latin America or the Middle East. Extreme inequality levels can be found among nations which historically experienced white settlers’ colonization and extreme forms of racial injustices (e.g. South Africa). The persistence of inequality in such countries is in part due to the lack of land ownership reforms, the absence of social security and progressive taxation systems.

 

  • In Russia in 2019, the top 10% captured 46% of the national income, more than twice the share of the bottom 50%. Russia is a country which experienced after the fall of the Soviet Union, one of the fastest increase in inequality. Its top 10% income share doubled in a few years after 1988 and it stands today at 46%. Lack of financial transparency, progressive taxation and a highly deregulated economy contribute to maintain current inequality rates at such high levels.

 

  • In Asia, within-country inequality has been rising significantly since the 1990s. In India, the top 10% income share grew from 30% in the 1980s to over 56% today, following deregulation and liberalization reforms. In contrast, the top 10% share in China grew from 28% to 41% in 2019. The lower rise of inequality in China was associated with stronger growth rates and much faster poverty eradication than in India, showing that more economic growth need not necessarily mean increased inequality.

 

  • The US shows a rise in the concentration of incomes unseen in other rich nations. The top 10% increase from 34% to 45% between 1980 and 2019. Half of the American population was shut from pretax economic growth. Unequal access to education and health care, declining minimum wage and lesser tax progressivity are likely to have fueled inequality over the past decades.

 

  • Europe stands as the most equal of all regions, with the top 10% receiving 35% of income in 2019. This can partly be explained by corporate governance norms and collective bargaining laws , as well as more equal access to higher quality education and healthcare, and a higher degree of progressive direct taxation.

 

  • Global inequality data shows that rising inequality is not a fatality and that countries with strong investments in public services and welfare policies have the lowest inequality levels. Tackling inequality is a matter of political choice.

 

While countries are still reluctant to publish transparent and high-quality fiscal and administrative data, the impact of high inequality levels on the countries’ political stability has resurfaced as a critical issue in several regions: Middle East uprisings, France’s Yellow Vests movement, 2019 protests in Chile, etc. Similarly, the countries most affected by the Covid-19 pandemic were mostly those that display high and rising levels of inequality. For countries to best address this issue, governments’ commitment to the publication of transparent inequality data and their ability to measure the evolution of inequality per country accurately is crucial. The WIL’s 2020 global income inequality data update wishes to address the lack of governments’ transparency by making a significant contribution to the expansion and improvement of the available data.

 

In-depth Look at Regional Inequality 

Africa

Three main facts on inequality in African countries:

  • Inequality levels in the African region are extremely high: the average country-level top 10% income share equals half of the national income.
  • South Africa is the most unequal country of the region: in 2019, the income share of top 10% households is estimated at 65%.
  • Inequality levels seem to have changed very little, on average, over the last decades.

For a better understanding of the regional trends, you can download:

 

Asia

Three conclusions on the evolution of income inequality in Asia, for the period 1993 to 2019:

  • In Asia, the top 10% captured 49% of national income in 2019, showing a decrease in regional inequality since 1990, where the top 10% share amounted to 57%.
  • While inequality has substantially risen in India and China, in the early 1990s and 2000s, it stabilized in China while it continued to rise in India. This suggests that national economic policies do matter and lower inequality levels can accelerate both poverty reduction and overall economic growth rates.
  • Within-country inequality has been rising significantly in major emerging economies since 1990, while regional inequality in Asia has been decreasing. This trend suggests a great economic convergence among Asian economies.

 

For a better understanding of the regional trends, you can download:

Europe

Three main conclusions can be drawn on the evolution of income inequality in Europe (1980-2019).

  • Europe is the least unequal region worldwide, with the top 10% capturing 35% of the averge national income in 2019
  • Western European countries continue to lead on redistributive outcomes due to greater redistribution between the top 10% and the bottom 50%. However, regressive tendencies have emerged in both East and West over the last 10 years.
  • Income inequality within countries has grown significantly since 1980, but less so since the Great Recession (2007-2009).

For a better understanding of the regional trends, you can download:

 

Russia

Four key highlights about the evolution of income inequality in Russia

  • In Russia in 2019, the top 1% captured 20% of the national income, as much as half of the population.
  • Russian incomes have polarized much more profoundly during the 1990s transformations than in Eastern Europe: the top 10% share has doubled, up to 46% in 2019.
  • National income growth has stagnated since the late 2000s. In recent years, Eastern European national income per adult has overtaken Russia’s adult national income.

For a better understanding of the regional trends, you can download:

 

Latin America

Four conclusions can be drawn from the new Latin American income inequality series on WID.world:

  • Latin America is among the most unequal regions, with the top 10% capturing 54% of the national income.
  • Chile, Mexico and Brazil are the 3 most unequal countries in the region, with the top 10% share capturing respectively 60%, 58%, 57% of the average national income (2019).
  • Data shows a decline in inequality since 2000 in Ecuador, Argentina and Uruguay, with the top 10% share capturing respectively 38%, 40% and 42% of the national income (2019).
  • Inequality levels are underestimated in official measures, as they are solely based on survey data. In WID.world, we complemented survey data with tax data and national accounts to provide a more accurate picture of the true level of inequality in Latin America.

For a better understanding of the regional trends, you can download:

 

Middle East

Inequality data for the Middle East between 1990 and 2019 highlights three main results:

  • The Middle East is the most unequal region worldwide, with the top 10% capturing 56% of the average national income in 2019.
  • Gulf countries are the most unequal countries in the region: 54% of national income accrues to the top 10%
  • Inequality levels have remained unchanged over the last three decades. This is driven by the extreme levels of within-country inequality.

For a better understanding of the regional trends, you can download:

 

North America & Oceania

Main conclusions on the evolution of inequality in North America and Oceania:

  • In terms of pre-tax top 10% income shares in 2019, Australia (35%) and New Zealand (37%) remain significantly more equal than Canada (43%) and the US (45%)
  • The US shows a significant rise in the concentration of incomes, unseen in other rich nations: the top 10% captured 45% of the national income, close to half of it (2019).
  • In all four countries, we see declining wages as a share of national income. This decline does not reflect an increase in self-employment. Instead, corporate profits have surged. Without any change in the concentration of capital income, this increase in corporate operating surplus already does much of the work to explain the observed increases in inequality.

For a better understanding of the regional trends, you can download:

 

2 interactive tools to have a look at

 

Inequality Transparency Index

In 2019, the World Inequality Lab launched the Inequality Transparency Index, which describes the availability and quality of income and wealth inequality data for each country.

 

 

The index is constructed around two dimensions:

  • In the first dimension, we differentiate between four different sources of data: income surveys, income tax data, wealth surveys and wealth tax data.
  • In the second dimension, we evaluate various components for each of these sources: quality, frequency of publication and access to the data.

 

>> Have a look at the data transparency in your country

>> Download the technical note 2020/12 for a detailed insight on the construction of the index

>> Download our transparency data table 2020 to understand how the index is calculated

 

Income comparator

The Income comparator allows you to check where you rank on the income distribution of your country or region. Check it out!

 

Contacts

  • For any questions related to the data: info@wid.world
  • Media inquiries: Olivia Ronsain: olivia.ronsain@wid.world; +33 7 63 91 81 68

 

Acknowledgements

The World Inequality Lab gratefully acknowledge funding from the European Research Council (ERC Grant 856455) and from the French National Research Agency (EUR Grant ANR-17-EURE-0001″

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