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World distribution of income for 1970–2010: dramatic reduction in world income inequality during the 2000s

Soondong Hong (), Heejoon Han () and Chang Sik Kim ()
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Soondong Hong: Korea Fixed Income Research Institute and Sungkyunkwan University
Heejoon Han: Sungkyunkwan University
Chang Sik Kim: Sungkyunkwan University

Empirical Economics, 2020, vol. 59, issue 2, No 9, 765-798

Abstract: Abstract This paper nonparametrically estimates the distribution of world citizens’ income and investigates world income inequality for the period from 1970 to 2010. We consider 188 countries that account for 98.68% of the world population and almost 100% of the world GDP in the year 2010. Various income inequality indices such as the Gini coefficient reveal that the world income inequality dramatically decreased during the 2000s, whereas it only slightly declined from 1970 to 2000, because the across-country inequality component substantially decreased during the 2000s even if the within-country inequality component kept increasing during the 1990s and the 2000s. These findings still hold when we include top income tax data in the analysis. We also propose more sophisticated methods to impute missing top income share data and to combine them with income survey data.

Keywords: World distribution of income; Income inequality; Top income data; Inequality decomposition (search for similar items in EconPapers)
JEL-codes: H00 I30 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00181-019-01657-w

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