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Decomposing world income distribution : does the world have a middle class ?, Volume 1
Author:Milanovic, Branko; Shlomo Yitzhaki; Date Stored:2001/03/26
Document Date:2001/03/31Document Type:Policy Research Working Paper
SubTopics:Governance Indicators; Rural Poverty Reduction; Inequality; Services & Transfers to Poor; Poverty Impact EvaluationLanguage:English
Major Sector:(Historic)Economic PolicyReport Number:WPS2562
Sub Sectors:Macro/Non-TradeCollection Title:Policy, Research working paper ; no. WPS 2562
Volume No:1Related Dataset:World Income Distribution (WYD); Decomposing World Income Distribution Database;

Summary: Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by "region" (countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality within countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil's), and the middle-income countries (those with per capita income between Brazil's and Italy's). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

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