Global Inequality Remains Extremely High

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(09 September 2021) Inequality in the distribution of income is one of the most important measures of the quality of economic development, along with changes in the overall level of per capita income. However, national statistics offices typically devote much less time and resources to investigating income inequality indicators than traditional economic indicators such as GDP. As a result, official statistics on income inequality are scarce, and inconsistent across countries, making it difficult to measure the evolution of inequality at the global level.

Working with the World Inequality Database, two researchers from the Paris School of Economics — Lucas Chancel and Thomas Piketty – have made a significant contribution toward filling this data gap by constructing world income distribution estimates from 1820 to 2020. Some key findings:

  • The level of global income inequality has always been very large and has grown significantly in the industrial era.
  • The ratio of average annual income of the wealthiest 10% of population to the average annual income of the bottom 50% of the population by income level (Top10/Bottom50 ratio) increased from 18.5 to 41.1 between 1820 and 1900 and averaged around 40 between 1900 and 2020.
  • In 2020 the richest 10% of people got over 50% of global income, while the poorest 50% of people got less than 10% of global income. The richest 1% of population got three times more of the world's total income than the poorest 50%. And the richest 0.1% of population had the same amount of income as the poorest 50%. These proportions in global income distribution have not changed significantly since the beginning of the twentieth century.

Chancel and Piketty believe decreasing income inequality can be achieved through fiscal revenue sharing, when part of income earned by the richest population is redistributed by government in favor of the poorest poorest. Their estimates show that the U.S. government already redistributes around 7% of national income from the top 10% to the bottom 50% of the U.S. population.

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