Author: Valentina Pasquali
Project Coordinator: Alessandro Magno, Denise Bedell

Income inequality and wealth distribution are two different concepts, in that income inequality focuses exclusively on the income side of the equation while wealth distribution looks at how the ownership of assets in a given society is shared among its members . However, both measures help chart the economic gap within a country's wealthiest and poorest citizens. Over the last ten years, economic inequality has been growing, particularly in developed countries where, historically, it had been more contained.

Data is from the World Bank Development Indicators.

Income Distribution (GINI Coefficient,) Latest data available.

% of population living with less than $2 a day

Latest data available.

Income share held by top 10%

Latest data available.

According to the World Bank, the GINI coefficient "measures the extent to which the distribution of income or consumption expenditure among individuals households within an economy deviates from a perfectly equal distribution." Therefore it is used as an indication of income inequality within countries. Practically, it measures the area between the Lorenz curve, a standard indicator of the distribution of income within a community, and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. In this index, 0 represents perfect equality, while 100 perfect inequality.

Other widely used measures of economic inequality are the percentage of people living with under US$2 a day (at 2005 international prices) and the share of national income held by the wealthiest 10% of the population.

According to World Bank data, income inequality tends to be lower in Northern Europe, with countries such as Sweden, Norway and Finland showing some of the world's lowest GINI coefficients. It is also surprisingly low in much less affluent countries like Afghanistan and Ethiopia. The highest levels of income inequality were found, in the last decade, in countries such as the Central African Republic, Honduras, Angola, Haiti, South Africa and Namibia.

The Organisation for Economic Development and Cooperation (OECD) maintains its own GINI index and related statistics for member countries. According to a 2011 OECD report, "over the two decades prior to the onset of the global economic crisis, real disposable household incomes increased by an average 1.7% a year in OECD countries. In a large majority of them, however, the household incomes of the richest 10% grew faster than those of the poorest 10%, so widening income inequality." In the late 2000s, Chile had the highest GINI coefficient, after taxes and transfers, among OECD member countries. The United States, Turkey and Mexico came right before it. At the other end of the scale, Slovenia, Denmark and Norway led the ranking with the lowest levels of income inequality.

In terms of absolute poverty, Liberia has one of the highest percentages of people living with less than US$2 a day (at 2005 international prices,) preceded by a long series of African countries, including Madagascar and Malawi. In the Seychelles, Comoros, Namibia, South Africa and Haiti, the 10% of the population at the top of the economic ladder control the highest share of national income compared to the rest of the world.

The website Worldmapper.com offers a variety of maps, conveying visually a host of different demographic and economic indicators. Here are a few relevant ones.

World Wealth Distribution Year 1500

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In the year 1500 European territories were some of the wealthiest on earth, when measured by the Gross Domestic Product (GDP) per person. The regions with the largest total GDPs were Eastern Asia and Southern Asia. These were also the most populous regions at that time. The regions with the lowest GDP in 1500 were Central Africa and Southeastern Africa. These regions also had the lowest GDP per person. In 2002 these regions enjoyed an even smaller proportion of the world total GDP expressed in purchasing power parity dollars than they did in 1500.

World Wealth distribution Year 2015 (forecast)

 

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The projected wealth of China in 2015 could mean it producing 27% of all the wealth in the world, if the economic trends established between 1975 and 2002 continue for another 13 years. In year 1 of the current era China produced 26% of the wealth in the world, but very slowly declined to generating only 5% of the world total in 1960. Whilst China is predicted to recover its former position within the world economy, this time instead of the Americas having a very small percentage of world wealth, as in year 1, now it is African territories that are predicted to remain small on the international financial stage. Eastern European territories are also predicted to have decreasing proportions of world wealth.

Women’s Income

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The total income of women is highest in the United States, and second highest in China. Women in the United States have a high total income because on average they are some of the highest paid women in the world. Women in China earn below the world average, but they have high total earnings due to the large population of China. Norway and Denmark are home to women with the highest annual earnings per person in the population. Women living in Yemen and Sierra Leone earn 150 to 250 times less per person. Income is measured here in its purchasing power where it is earned, rather than being adjusted to be made comparable using a simple exchange rate.

 

Men's Income

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The total income of all men in the world is more than double that of all women in the world. In every region men earn more than women do. The greatest income inequality between men and women is in Southern Asia where men earn five times more than women on average. The neighbouring region of Eastern Asia has the smallest difference between men and women, where men earn twice what women earn. Men have the lowest average earnings in Central Africa, with annual incomes allowing for purchasing power of only 3.7% of the average earnings of men in North America and Western Europe.

Data is from the World Bank Development Indicators and from the Organisation for Economic Cooperation and Development. Figures are the latest available for each country and reference years vary as indicated. Wealth distribution maps are from Worldmapper.com

Income Distribution (GINI Coefficient), Latest Data Available

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Income Distribution, Late 2000s, OECD Countries

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% of population living with less than $2 a day, latest available data
 
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Income share held by top 10% of the population, latest available data
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