Friday, April 07, 2006

Is the world becoming more unequal?

The answer, according to the best data so far, is no.

A friend just alerted me to this Macromedia application on Xavier Sala-i-Martin's website illustrating graphically the world's income distribution over time. It is definitely worth a look, as is the rest of Sala-i-Martin's cheeky website.

The problem with a lot of articles or op-eds saying the world is becoming more unequal is that they often just look at GDP per capita across countries. It is true that GDP per capita is becoming more dispersed but the reason for that is largely the failure of sub-Saharan African countries to grow. A tragedy, certainly, but one that unjustly overshadows India's and China's stellar economic growth. Sala-i-Martin, in contrast, tries to estimate income distributions for each country and then group them together, weighted by population, and look at the worldwide distribution. The result is a much more optomistic picture of poverty reduction and inequality than what many people are used to seeing.

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