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The elephant curve of global inequality and growth

Author

Listed:
  • Facundo Alvaredo

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Lucas Chancel

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Thomas Piketty

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuel Saez

    (UCLA - University of California [Los Angeles] - UC - University of California)

  • Gabriel Zucman

    (Department of Mathematics [Berkeley] - UC Berkeley - University of California [Berkeley] - UC - University of California)

Abstract
We show that global income inequality can be relatively well estimated from 1980 to 2016, by combining data on national incomes and available Distributional National Accounts. Our contribution is threefold. First, we attempt to go beyond country-level inequality data by comparing inequality dynamics between and within large geographic aggregates such as Europe, North America or Asia. We show that inequality increased almost everywhere, but at different speeds, revealing the important of national institutions and policy in the shaping of inequality. Second, we combine data on income inequality within these aggregates to estimate a global distribution of income since 1980. We show that our general conclusions are robust to several alternative methodologies to measure global inequality. According to our benchmark results, the global richest 1% adults captured 27% of total income growth since 1980, that is two times more than the bottom 50% adults, who collectively captured 12% of total growth over the period. The top 1% income share increased from 16% to 20% over the period. We observe a trend-break after the financial crisis, but this is only due to between-country reduction in inequality, as within-country inequality continued to rise. Third, we estimate the future evolution of global inequality between 2016 and 2050 by testing several assumptions about national income and population growth rates and inequality dynamics. We find that optimist assumptions about growth in emerging countries in the future will not be sufficient reduce global inequality between individuals between now and 2050 if countries continue their own inequality trends since 1980, highlighting the need for a renewed debate on the set of policies required to generare more equitable growth pathways.

Suggested Citation

  • Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "The elephant curve of global inequality and growth," PSE-Ecole d'économie de Paris (Postprint) halshs-01883605, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01883605
    DOI: 10.1257/pandp.20181073
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    References listed on IDEAS

    as
    1. Facundo Alvaredo & Anthony Atkinson & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Distributional National Accounts (DINA) Guidelines : Concepts and Methods used in WID.world," World Inequality Lab Working Papers halshs-02794308, HAL.
    2. Facundo Alvaredo & Thomas Piketty & Emmanuel Saez & Lucas Chancel & Gabriel Zucman, 2018. "World Inequality Report 2018," PSE-Ecole d'économie de Paris (Postprint) halshs-01885458, HAL.
    3. Christoph Lakner & Branko Milanovic, 2016. "Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession," The World Bank Economic Review, World Bank, vol. 30(2), pages 203-232.
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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