Decomposing World Income Distribution : Does the World Have a Middle Class?

Decomposing World Income Distribution : Does the World Have a Middle Class?

Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by "region" (countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality within countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil's), and the middle-income countries (those with per capita income between Brazil's and Italy's). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

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Bibliographic Details
Main Authors: Yitzhaki, Shlomo, Milanovic, Branko
Language:English
en_US
Published: World Bank, Washington, DC 2001-03
Subjects:AVERAGE INCOME, BETWEEN-GROUP INEQUALITY, CITIZEN, CITIZENS, COUNTRY DATA, DATA COVERAGE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DISTRIBUTION DATA, DISTRIBUTION FUNCTION, GDP, GINI COEFFICIENT, GINI INDEX, GROSS INCOME, GROUP INEQUALITY, HIGH INEQUALITY, HOUSEHOLD SURVEYS, INCOME, INCOME DISTRIBUTION, INCOME GROUPS, INCOME INEQUALITY, INCOME LEVEL, INCOME LEVELS, INCOME MEAN, INCOME REDISTRIBUTION, INCOME SHARE, INCOME SHARES, INCOMES, INCREASING FUNCTION, INDIVIDUAL COUNTRIES, INEQUALITY, LOG-NORMAL DISTRIBUTION, LOW INCOME, MEAN INCOME, MEAN VALUE, MIDDLE CLASS, NATIONAL INCOME, PER CAPITA INCOME, POLICY RESEARCH, POLITICAL INSTABILITY, POOR, POOR PEOPLE, POPULATION SHARE, PURCHASING POWER, RESIDUAL TERM, SIGNIFICANT EFFECT, TRANSITION ECONOMIES, WELFARE INDICATORS,
Online Access:http://documents.worldbank.org/curated/en/2001/03/1003175/decomposing-world-income-distribution-world-middle-class
https://hdl.handle.net/10986/19693
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Summary:Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by "region" (countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality within countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil's), and the middle-income countries (those with per capita income between Brazil's and Italy's). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

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