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Charts of the Day: Global Income Inequality

An interesting set of some 40 charts depicting poverty levels, inequality, and income distributions covering 191 countries between 1970 and 2006 in a paper from MIT's Maxim Pinkovskiy and Columbia's Xavier Sala-i-Martin. (gated link)

This first one shows that while income inequality (as measured by the Gini coefficient) between countries has fallen sharply, within-country inequality has increased slightly:

These next two charts show the evolution of the ratio of incomes between the 90th and 10th percentiles and the 75th and 25th percentiles:

Both ratios have fallen sharply since the late 70's but have been pretty much flat (and rising in the case of the 75-25 ratio) since the late-90's:

While these recent trends appear potentially worrisome, they suggest that any recent rise in inequality may be between the lower and upper segments of the world middle class (the 75th and 25th percentiles), rather than the richest and poorest (90th and 10th percentiles).

These next set of charts show how the total distribution of global income has improved since 1970:

The first of the two vertical lines corresponds to an income of $1 a day ($312 annually in 2006 dollars), and the second line corresponds to a United Nations definition of poverty which comes out to $554 annually in 2006 dollars. Pinkovskiy and Sala-i-Martin are hopeful for the prospects of the UN's Millenium Development Goal of cutting poverty by 50% between 1990 and 2015:

poverty has fallen by about 30% in the 16 years since 1990, giving the world ample time to reduce poverty by a further 20% of 1990 levels. If we accept the World Bank’s recent PPP revision, then poverty has fallen by about 58%, and the first MDG has been achieved...Importantly, a large part of the decline in poverty has taken place in Africa.