Global income inequality in the 21 st century

Transcription

1 Global income inequality in the 21 st century Branko Milanovic I Congreso Internacional de Estudios de Desarollo Santander Nov. 2012

2 Global inequality today and in the last 25 years

3 Three concepts of inequality defined Concept 1 inequality Concept 2 inequality Concept 3 (global) inequality

4 Gini coefficient Inequality The mother of all inequality disputes Concept 2 Concept 1 Divergence begins China moves in Concept 3 India moves in Divergence ends year With new PPPs Graph in interyd\dofiles\defines.do

5 Gini coefficient in percent International unweighted and population- weighted inequality, Concept 2 India as new engine of equalization Concept 2 without China Concept year Graph in interyd\dofiles\defines.do; using gdppppreg.dta

6 Population coverage Africa Asia E.Europe LAC WENAO World Non-triviality of the omitted countries (Maddison vs. WDI)

7 What does Gini of 70 mean? World Brazil USA Sweden year twoway (scatter gini_disposable year if contcod=="swe", c(l)) (scatter gini_disposable year if contcod=="usa, c (l)) (scatter gini_gross year if contcod=="bra" & source=="sedlac", c(l) legend(off) text( "Sweden") text( "USA") text( "Brazil")) (scatter gini_disposable year if contcod=="wrl", c(l) text ( "World")) Using data_voter_checked.dta to which I added the world from my global data

8 How many people (ranked from the poorest to the richest) you need to get to each 1/5 th of global income? From forpogge.xls

9 How the world has changed: between the fall of the Berlin Wall and the fall of Wall Street

10 Real income growth at various percentiles of global income distribution, (in 2005 PPPs) Real PPP income change Percentile of income distribution

11 Global Lorenz curves in 1988 and

12 Real PPP income change Shape of global growth vs. US growth World, United States, Percentile of income distribution

13 combined real_growth 1 and US pattern is not unusual: in most countries increasing gains for the rich Philippines and Bangladesh Mexico and Colombia BGD MEX PHL COL decile decile

14 combined real_growth 1 and Increasing gains for the rich with a widening urban-rural gap Urban and rural China Urban and rural Indonesia decile decile From key_variables_calcul2.do

15 Real growth Average real growth (in $PPP) across country deciles (population-weighted) 120 Real $PPP growth , in percent, by decile population-weighted Income decile

16 Global inequality over the long-run of history

17 Global income inequality, (Bourguignon-Morrisson and Milanovic; 1990 PPPs ) Theil Gini year twoway (scatter Gini year, c(l) xlabel(1820(40)2020) ylabel(0(20)100) msize(vlarge) clwidth(thick)) (scatter Theil year, c(l) msize(large) legend(off) text( "Theil") text( "Gini"))

18 A non-marxist world Over the long run, decreasing importance of within-country inequalities despite some reversal in the last quarter century Increasing importance of between-country inequalities (but with some hopeful signs in the last five years, before the current crisis), Global division between countries more than between classes

19 Theil 0 index (mean log deviation) Composition of global inequality changed: from being mostly due to class (within-national), today it is mostly due to location (where people live; betweennational) Location 40 Location 20 Class 0 Class Based on Bourguignon-Morrisson (2002), Maddison data, and Milanovic (2005) From thepast.xls

20 Gaps between countries today

21 Different countries and income classes in global income distribution in percentile of world income distribution Russia USA China India Brazil From calcu08.dta country percentile

22 Almost non-overlapping distributions of India and the US: less than 10% of people in India better-off than the poorest percentiles in the US But this is not true for Brazil and China: more than ¾ of the population of Brazil better off than the poorest Americas; about ½ of the Chinese. Brazil within itself spans the entire global distribution China dominates India at any point of income distribution Russia dominates Brazil. Americans (richest 10%), Brazilians and Russians (for both, just the highest national percentile) all in the top global percentile

23 Spain and the rest of the world percentile of world income distribution Germany Ecuador Spain Argentina Ivory Coast country ventile

24 Problems of migration

25 The XXI century trilema A. Globalization of ideas, knowledge, Communication, awareness of others living standards B. Increasing differences in mean incomes among countries C. No movement of people If A and B, then no C. Migration is the outcome of current unequal globalization. If B and C, then no A. Unequal globe can exist if people do not know much about each other s living conditions or costs of transport are too high. If A and C, then no B. Under globalization, people will not move if income differentials are small.

26 Growing inter-country income differences and migration: Key seven borders today

27 Concluding comments Are the increase around the median and the dip around the th global percentile related? Are China/India growth spelling the doom of the Western middle class? Will within-inequalities increase as betweencountry inequalities go down? Role of migration as an engine of development

28 The key difficulty How to manage: (1) Rise of the emerging market economies and rich world middle class (2) Rising domestic inequalities (3) Migration, while recognizing its potential for global poverty alleviation

29 From the point of view of Spain or any advanced country, this means Increased competitiveness in the age of globalization Protection of welfare state and lower domestic inequality Openness of borders and managed migration Often these objectives might go against each other.

30 Gini coefficient Concept 2 Concept 1 Concept year