COVID-19 spread around the world and made existing inequalities worse.

Author: Luca Ventura
Project Coordinator: Binh P
Paraisopolis, a poor neighborhood in São Paulo amid gentrification.

Inequality kills.

That's the title of a recent report published by Oxfam which found that during the first two years of the pandemic inequality contributed to the death of at least 21,000 people each day, or one person every four seconds. Over the course of those four seconds, the world’s 10 richest people were making roughly $60,000, or $1.3 billion a day. Overall, 160 million more people fell into poverty since the start of the global health emergency while the richest 10 billionaires more than doubled their wealth to an astounding $1.5 trillion. 

By now you have probably realized that the odds of becoming one of the world's top 10 billionaires are extremely low. However, the chances of entering the class of the top 10% income-earners are indubitably much higher, and in statistical terms any given individual is far more likely to belong to that section of the society that represents the bottom 50% of the adult world population, which collectively amounts to 2.5 billion people. Varying from country to country and due to a myriad of other factors, we might live a relatively comfortable life and consider ourselves lucky; yet on a more level playing field our slice of the economic pie would be much larger. In no country in the world but one (Czech Republic) does the bottom half of the population gets a share of national income larger than 25%, and such a figure can get much lower—as low as 5.48% (South Africa).

As strange as it might seem, global inequality impacts the rich too. Consultancy Knight Frank provides a striking example: It takes a net wealth (as in all the assets owned by a person) of almost $8 million to join the richest 1% of the tiny European principality of Monaco, $5.1 million if you are in Switzerland and $4.7 million in the United States, but only $60,000 if you live in India, Philippines or Indonesia, and merely $20,000 if you are in Kenya. One could argue that every rich person is equal, but some are more equal than others.

National income is the sum of all incomes received by individuals residents in a given country over a year. Incomes takes various forms and we typically distinguish two broad sources: incomes stemming from individuals’ labor (e.g. wages or salaries) and incomes stemming from individuals’ wealth (e.g. interest and dividends).

Source: World Inequality Report 2022

Yet, while the relative fortunes of the most affluent individuals in virtually all nations have been growing in recent years, and often for decades, everyone else has become poorer: Covid has deepened this trend, cutting the incomes of 99% of the global population. The pandemic piled up over the usual culprits of inequality (lopsided tax policies and fiscal evasion, racial and gender discrimination and of all kinds, technology gaps, climate change, conflict and all the sad legacies of colonialism) and pushed down further those who were already struggling to stay afloat.

Families across the globe are bogged down by debt due to healthcare expenses and the loss of productivity triggered by the pandemic—not to mention the past, the present and the future damage caused by the uneven distribution of the vaccine. The digital divide penalized not only many workers, but countless children unable to access remote learning during school closures: They might not be the breadwinners of their families today, but their future prospects and earnings are likely to be affected tomorrow, perpetuating cycles of poverty and low social mobility. And while inflation surged globally, there is such a thing as inflation inequality too: lower-income families spend a higher percentage of their budget on groceries and energy for their homes and transportation, basic necessities whose prices are more volatile and tend to increase the most. It is expensive to be poor.

Yet, inequality does not have to be an inevitability. Take the example of the United States. The widely-held assumption that inequality is the price to pay for rapid economic growth, and that over time the rising tide of abundance will lift all boats, still has many advocates. US President Ronald Reagan, more than anyone else, contributed to popularizing the concept of trickle-down economics. However, according to the Economic Policy Institute, between 1979 and 2019 wages for the richest 1% in the U.S. have soared 160%, while the share of wages for the bottom 90% has shrunk by about 9 percentage points. While the wealthy let their money make more money through investments and business ventures, the majority of Americans earn their living through salaries and wages—yet, taxes on salaries and wages are significantly higher than taxes on investments.

It is clear by now that how rich or poor a country is tells us nothing about how equal or unequal the rich and poor are within a given country. National averages and other single-number metrics such as the Gini coefficient, the most commonly used measure of income inequality, provide no indication of how income and wealth are distributed across the population, or who gains and who loses over time as a result of the adoption of different economic policies.

In December, the World Inequality Lab—a research center based at the Paris School of Economics—released the 2022 World Inequality Report (WIR), which presents analyses generated by more than 100 researchers from all continents over the course of the past four years. The poorest 50% of the global population—the researchers at the Lab assessed—currently earns just 8.5% of global income, generating a median income of $3,920 per year; by contrast, the richest 10% of the population currently takes 52% of global income, or $122,100 per individual each year.

These numbers conceal wide disparities both between and within countries and across regions. The top 10% of the population of the Middle East and Northern Africa, the two most unequal regions in the world, capture roughly 58% of the total national income; in Sub-Saharan Africa, that share amounts to 56% and in Latin America and South and South East Asia to 55%. Looking at nations individually, the richest top 10% earns more than 60% of the total income in six African countries, but less than 30% in several Slavic and Nordic countries, with other members of the European bloc not far behind percentage-wise.

Even taking into account intra-regional differences, the fact that Europe remains the most equal of all regions, with the top 10% receiving 36% of the national income, is not serendipity but the result—the report explains—of public investments in job creation, education and health financed through redistribution mechanisms in the tax system.

While fiscal matters can be fuzzy, the Inequality Lab offers a clear example of what such mechanisms can achieve. In 2020 alone, the report says, global billionaires’ wealth increased by more about $4 trillion: had a global tax been applied on such excess wealth, today these global billionaires’ would still be as rich as they were before the pandemic, yet the global healthcare spending for an entire year could have been almost doubled. Such a missed opportunity at such a crucial time—then again, wealth does not automatically trickle down.

Shares of National Income by Country

 

Inequality Ranking

 

Country

 

Bottom 50%

 

Top 10%

 

Top 1%

1 South Africa 5.48 66.23 22.0
2 Namibia 6.55 64.2 21.57
3 Zambia 6.95 61.74 23.17
4 Central African Republic 7.63 64.91 31.00
5 Eswatini 7.86 59.88 19.33
6 Botswana 8.12 59.26 22.74
7 Mozambique 8.30 64.63 31.11
8 Oman 8.77 56.21 19.57
9 Qatar 9.02 56.79 23.61
10 Angola 9.04 56.79 23.61
11 Yemen 9.15 59.50 24.71
12 Mexico 9.17 57.35 24.71
13 Zimbabwe 9.23 58.95 21.08
14 Guinea-Bissau 9.59 60.13 17.08
15 Congo 9.92 55.93 20.52
16 Bahrain 9.96 57.66 25.07
17 Brazil 10.07 58.56 26.60
18 Chile 10.18 58.91 26.47
19 Cameroon 10.63 52.05 15.85
20 Colombia 10.63 51.46 18.85
21 Costa Rica 10.72 50.10 19.29
22 Saudi Arabia 10.80 54.41 20.98
23 Peru 11.22 49.94 20.11
24 Lesotho 11.28 49.51 14.46
25 Comoros 11.39 50.26 14.15
26 Benin 11.42 54.75 17.51
27 Equatorial Guinea 11.45 51.63 17.59
28 Cote d'Ivoire 11.58 54.66 21.03
29 Kuwait 11.61 54.03 19.38
30 El Salvador 11.68 41.07 13.49
31 Malawi 11.79 56.45 28.04
32 Rwanda 11.84 53.94 19.89
33 South Sudan 11.91 50.01 15.53
34 Turkey 11.92 54.47 18.84
35 Turkmenistan 12.01 49.88 19.87
36 Palestine 12.03 51.41 17.93
37 Uganda 12.13 52.07 17.05
38 Seychelles 12.13 52.09 20.56
39 Ghana 12.21 48.91 15.23
40 Togo 12.22 47.98 13.85
41 Chad 12.30 49.30 15.71
42 Cabo Verde 12.38 49.08 13.91
43 Indonesia 12.39 48.00 18.28
44 Madagascar 12.48 50.76 15.17
45 United Arab Emirates 12.61 49.15 15.83
46 Bahamas 12.62 48.61 19.53
47 Belize 12.62 48.61 19.53
48 Bolivia 12.62 48.61 19.53
49 Dominican Republic 12.62 48.61 19.53
50 Guatemala 12.62 48.61 19.53
51 Guyana 12.62 48.61 19.53
52 Haiti 12.62 48.61 19.53
53 Honduras 12.62 48.61 19.53
54 Jamaica 12.62 48.61 19.53
55 Nicaragua 12.62 48.61 19.53
56 Panama 12.62 48.61 19.53
57 Paraguay 12.62 48.61 19.53
58 Suriname 12.62 48.61 19.53
59 Trinidad and Tobago 12.62 48.61 19.53
60 Iraq 12.62 52.23 20.72
61 DR Congo 12.64 48.84 14.63
62 Lao PDR 12.84 49.44 20.14
63 Papua New Guinea 12.85 46.99 16.66
64 Tanzania 12.95 51.37 18.15
65 Zanzibar 12.95 51.37 18.15
66 Israel 12.98 49.15 16.55
67 Kenya 13.01 48.72 15.19
68 Djibouti 13.09 49.55 15.86
69 India 13.13 57.13 18.15
70 Iran 13.25 52.71 18.20
71 United States 13.31 45.46 18.76
72 Senegal 13.38 47.71 13.18
73 Morocco 13.56 49.43 15.14
74 Hong Kong 13.59 48.18 17.85
75 Cambodia 13.86 46.50 18.56
76 Thailand 13.89 48.79 17.76
77 Georgia 13.90 49.03 21.11
78 Burundi 14.02 48.39 14.74
79 Sri Lanka 14.11 49.43 20.64
80 Jordan 14.13 49.57 17.51
81 Philippines 14.32 46.08 16.88
82 China 14.36 41.66 14.00
83 Macao 14.36 41.66 14.00
84 Gabon 14.42 43.32 11.02
85 Vietnam 14.58 46.26 16.92
86 Uzbekistan 14.58 46.26 11.02
87 Egypt 14.62 49.94 19.93
88 Mauritius 14.81 47.40 15.89
89 Mongolia 14.88 44.17 16.54
90 Somalia 14.94 44.06 12.44
91 Sierra Leone 14.99 47.00 15.02
92 Bhutan 15.01 42.59 14.17
93 Gambia 15.02 45.87 13.61
94 Burkina Faso 15.04 47.26 14.56
95 Romania 15.15 41.42 14.41
96 Liberia 15.43 43.24 12.20
97 Tajikistan 15.50 42.72 11.59
98 Nigeria 15.58 40.70 14.79
99 Canada 15.72 43.30 11.60
100 Niger 15.77 45.04 15.36
101 Sudan 15.84 45.47 13.82
102 Eritrea 15.84 45.47 13.82
103 Ethiopia 15.93 44.07 17.09
104 Myanmar 16.04 46.45 14.71
105 Korea 16.04 46.45 14.71
106 Ecuador 16.14 37.32 11.66
107 Australia 16.16 33.60 12.85
108 Guinea 16.19 42.69 12.53
109 Mali 16.34 41.26 9.69
110 Libya 16.34 44.20 13.56
111 Kazakhstan 16.36 42.53 15.40
112 Montenegro 16.48 35.90 9.69
113 Bulgaria 16.48 43.52 18.27
114 Tunisia 16.61 41.37 10.91
115 Singapore 16.65 46.28 14.21
116 Nepal 16.67 41.92 13.89
117 Timor-Leste 16.75 42.32 15.66
118 Mauritania 16.78 40.48 10.75
119 Japan 16.78 44.89 13.11
120 Kyrgyzstan 16.82 44.15 18.43
121 Russian Federation 16.98 46.43 21.45
122 Bangladesh 17.06 42.85 16.33
123 Pakistan 17.27 43.26 16.82
124 Malaysia 17.30 40.27 14.87
125 Sao Tome and Principe 17.50 39.38 8.95
126 Serbia 17.75 66.23 10.85
127 Latvia 17.91 34.52 9.13
128 Lithuania 18.06 36.57 10.95
129 Maldives 18.06 39.96 13.26
130 Moldova 18.19 34.39 9.81
131 Estonia 18.24 34.74 11.76
132 Bosnia and Herzegovina 18.27 34.07 8.88
133 Uruguay 18.30 40.13 14.95
134 Croatia 18.41 35.40 10.24
135 Armenia 18.54 40.62 15.39
136 Albania 18.91 34.00 8.91
137 Germany 18.99 37.07 12.77
138 Algeria 19.02 38.08 9.91
139 Cyprus 19.15 36.36 11.49
140 Brunei Darussalam 19.22 37.76 13.56
141 Poland 19.47 37.75 14.87
142 New Zealand 19.57 34.57 11.87
143 Portugal 20.04 35.21 9.59
144 Luxembourg 20.19 33.53 10.37
145 Azerbaijan 20.29 39.07 14.31
146 United Kingdom 20.35 35.67 12.65
147 Belgium 20.40 32.89 8.63
148 Ireland 20.44 35.18 11.80
149 Malta 20.50 32.52 9.14
150 Italy 20.70 32.21 8.71
151 North Macedonia 20.94 29.23 6.52
152 Greece 21.01 32.61 10.80
153 Spain 21.12 34.48 12.38
154 Denmark 21.38 33.86 12.91
155 Taiwan 21.38 33.99 14.51
156 Finland 21.51 33.84 10.88
157 Hungary 22.00 33.85 12.27
158 Austria 22.04 29.43 10.09
159 Netherlands 22.50 33.39 6.92
160 Belarus 22.51 33.49 9.86
161 Ukraine 22.57 32.49 9.48
162 Switzerland 22.63 32.23 11.46
163 France 22.72 32.23 9.84
164 Slovenia 23.07 29.58 8.02
165 Sweden 23.78 30,78 10.54
166 Slovakia 24.56 26.50 7.04
167 Norway 24.84 29.59 8.88
168 Iceland 24.98 29.09 8.78
169 Czech Republic 25.48 28.57 10.04

Source: World Inequality Database.