Income inequality at a global level tends to be conceived of in three different ways: global income inequality, based on the income of all individuals regardless of where they live; between-country income inequality, based on the mean income in different countries; and between country income inequality that also factors in countries’ population sizes (Milanovic, 2012). Within country income inequality is the differences between households within a country.
Despite standing at very high levels global income inequality has declined for the first time in almost two hundred years: between 2000 and 2015 the global Gini decreased from 75 per cent to 62 per cent (World Bank, 2016; Milanovic, 2012). This is attributed to the substantial reduction in inequality between countries, based on population-weighted data, mostly due to income growth in China and India. The growth of China and India largely explain the decline in global household inequality, rather than changes in the distribution of income within countries (UNDP, 2015). Research suggests that global income inequality (inequality between all individuals in the world) is much greater than income inequality within any individual country (Milanovic, 2012).
Income inequality declined within a small majority of countries over the 2000s, especially in Latin America (World Bank, 2016). Conversely, income inequality in many high-income countries has increased (World Bank, 2016). The middle classes of emerging market economies such as China, India, Indonesia, Brazil and Egypt, have seen their per capita incomes rise, as have many of the poorer, but not the poorest, people across the world (Milanovic, 2012). This allowed many people to escape absolute poverty (Milanovic, 2012).
Studies have found that the wealthiest individuals have become wealthier (the incomes of the top one per cent rose by 60 per cent between 1988-2008) while the situation of the poorest segments of the population has not improved – for the poorest five per cent of the population real incomes have remained the same (Milanovic, 2012; DSDP, 2013). Poor people have less income partly because of the rise of non-standard forms of employment, such as temporary employment or informal sector work which pay less well (UNDESA, 2013).
Source: https://www.weforum.org/agenda/2015/11/5-maps-on-the-state-of-global-inequality/
In 2011 Ortiz and Cummins calculated Gini index values by region. They found that middle-income countries had high levels of inequality, with Gini index values of 48.3 in Latin American and the Caribbean in 2008 for example. Gini index trends show that Eastern Europe/former Soviet Union and Asia had the largest increases between 1990 and 2008 (up 8.7 to 35.4). Latin America remained the region with the highest level of income inequality, although since 2000 it has reduced its Gini index value by 1.3. Sub-Saharan Africa was highly unequal (Gini index value of 44.2) but appears to have reduced its Gini index by almost five points, on average, since 1990. It has risen by 4.0 in Asia, between 1990-2008, to reach 40.4 and by 3.5 in high-income countries to reach 30.9 (Ortiz & Cummins, 2011).
In countries where inequality has declined (notably Brazil and other Latin American countries), the expansion of education and public transfers to the poor are key factors in the decline (UNDESA, 2013; UNDP, 2013). These successful cases of reducing economic inequalities illustrate the importance of policies and institutions in shaping inequality trends (UNDESA, 2013; UNICEF et al., 2014; UNDP, 2013).
A study by Credit Suisse found that global wealth inequality has increased since 2010: in 2014 48 per cent of global assets were owned by just one percent of the population (Hardoon, 2015).
Widespread inequality of opportunity persists, with large inequalities in health, education, and nutrition within and across social groups, countries, and different regions within countries (UNDP, 2015; UNDESA, 2013; UNDP, 2013). It is often these spatial inequalities which account for a significant proportion of within-country inequalities (UNDESA, 2013). Inequality is often higher in rural than in urban areas (UNDESA, 2013; UNDP, 2013). Various social groups, especially youth, older persons, persons with disabilities, indigenous peoples and rural populations, suffer disproportionately from inequalities such as income poverty and inadequate access to quality services (UNDP, 2013). For example, a study of 15 developing countries found that persons with disabilities have, on average, lower educational attainment and employment rates than persons without disabilities (Mitra et al., 2013). Alongside gender inequalities, inequalities between these groups and the rest of the population have persisted over time (UNDESA, 2013; Deaton, 2013; UNICEF & UN Women, 2013). Despite significant progress in education and some progress in health outcomes, evidence shows that, women continued to lag behind in access to livelihood (UNDP, 2013).
Inequality has gained greater prominence as an issue of concern to the international community, the general public, civil society and governments, as a result of the financial and economic crises (UNDP, 2013). The Sustainable Development Goals includes a goal to ‘reduce inequality within and among countries’. In addition, it has been recommended that the other goals should have targets and indicators that focus on the most disadvantaged groups (UNICEF & UN Women, 2013). Policy makers tend to prioritise tackling inequality of opportunities (UNDP, 2013). However, there is evidence that suggests that reducing income inequality is key to reducing other inequalities and enhancing opportunities (UNDP, 2013).
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