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Accelerating Convergence in the World Income Distribution

Author

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  • Tim Kane
Abstract
In the 1990s, cross-country empirical data suggested that the world income distribution was diverging into two peaks, rich and relatively poor. With the passing of time, we can update that empirical analysis by calculating a Markov transition matrix for the most recent two decades. This paper presents the clearest empirical picture to date of how the world income distribution has changed every succeeding decade from 1960 to 2010. This paper also compares transition matrices for 122 countries over two periods, 1970-90 and 1990-2010 and finds that divergence in the earlier period has shifted to convergence in the latter. Further, differencing the two matrices shows how the dynamic is itself evolving. Projecting these dynamics forward suggests rapid growth across all regions over the coming century that will bring nearly all countries to within 80 percent of the per capita income frontier.

Suggested Citation

  • Tim Kane, 2016. "Accelerating Convergence in the World Income Distribution," Economics Working Papers 16102, Hoover Institution, Stanford University.
    • Handle: RePEc:hoo:wpaper:16102
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    References listed on IDEAS

    as
    1. Parmeter, Christopher F., 2008. "The effect of measurement error on the estimated shape of the world distribution of income," Economics Letters, Elsevier, vol. 100(3), pages 373-376, September.
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    6. Charles I. Jones, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 19-36, Summer.
    7. Xavier Sala-i-Martin, 2006. "The World Distribution of Income: Falling Poverty and … Convergence, Period," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(2), pages 351-397.
    8. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    9. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 327-368.
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    Cited by:

    1. Arun Frey, 2018. "The case for convergence: assessing regional income distribution in Asia and the Pacific," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 25(2), pages 1-19, December.
    2. Asano Takao & Shibata Akihisa & Yokoo Masanori, 2023. "Middle-income traps and complexity in economic development," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 27(4), pages 553-565, September.
    3. Matkowski, Zbigniew & Prochniak, Mariusz & Rapacki, Ryszard, 2016. "Real Income Convergence between Central Eastern and Western Europe: Past, Present, and Prospects," EconStor Conference Papers 146992, ZBW - Leibniz Information Centre for Economics.

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