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Using social tables, the author makes an estimate of global inequality (inequality among world citizens) in the early 19th century. The analysis shows that the level and composition of global inequality have changed over the past two centuries. The level has increased, reaching a high plateau around the 1950s, and the main determinants of global inequality have become differences in mean country incomes rather than inequalities within nations. The inequality extraction ratio (the percentage of total inequality that was extracted by global elites) has remained surprisingly stable, at around 70 percent of the maximum global Gini, during the past 100 years.

Average income --- Average incomes --- Economic review --- Equity and Development --- Growth rates --- Historical perspective --- Household surveys --- Income --- Income distribution --- Income distribution data --- Income distributions --- Income inequality --- Income levels --- Incomes --- Inequality --- International Economics & Trade --- Mean income --- Mean incomes --- Policy research --- Poverty Impact Evaluation --- Poverty Reduction --- Power parity --- Public policy --- Public Sector Development --- Real growth --- Services and Transfers to Poor --- Trade Policy

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Latin America is together with Sub-Saharan Africa the most unequal region of the world. This paper documents recent inequality trends in the Latin American region, going beyond traditional measures of income inequality. The paper also reviews some of the explanations that have been put forward to understand the current situation, and discusses why reducing income inequality should be an important policy priority. In particular, the authors discuss channels through which inequality can affect growth and output volatility. On the whole, the analysis suggests a two-pronged approach to reduce inequality in the region that combines policies aimed at improving the distribution of assets (especially education) with elements aimed at improving the capacity of the state to redistribute income through taxes and transfers.

Average income --- Economic Conditions and Volatility --- Economic Theory and Research --- Gini coefficient --- Impact of inequality --- Income --- Income inequality --- Inequality --- Inequality trends --- Macroeconomics and Economic Growth --- Output volatility --- Policy Research --- Poverty levels --- Poverty Reduction --- Pro-Poor Growth --- Rural Development --- Rural Poverty Reduction

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• EndNote
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Using social tables, the author makes an estimate of global inequality (inequality among world citizens) in the early 19th century. The analysis shows that the level and composition of global inequality have changed over the past two centuries. The level has increased, reaching a high plateau around the 1950s, and the main determinants of global inequality have become differences in mean country incomes rather than inequalities within nations. The inequality extraction ratio (the percentage of total inequality that was extracted by global elites) has remained surprisingly stable, at around 70 percent of the maximum global Gini, during the past 100 years.

Average income --- Average incomes --- Economic review --- Equity and Development --- Growth rates --- Historical perspective --- Household surveys --- Income --- Income distribution --- Income distribution data --- Income distributions --- Income inequality --- Income levels --- Incomes --- Inequality --- International Economics & Trade --- Mean income --- Mean incomes --- Policy research --- Poverty Impact Evaluation --- Poverty Reduction --- Power parity --- Public policy --- Public Sector Development --- Real growth --- Services and Transfers to Poor --- Trade Policy

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Standard approaches to decomposing how much group differences contribute to inequality rarely show significant between-group inequality, and are of limited use in comparing populations with different numbers of groups. This study applies an adaptation to the standard approach that remedies these problems to longitudinal household data from two Indian villages - Palanpur in the north, and Sugao in the west. The authors find that in Palanpur the largest scheduled caste group failed to share in the gradual rise in village prosperity. This would not have emerged from standard decomposition analysis. However, in Sugao the alternative procedure did not yield any additional insights because income gains applied relatively evenly across castes.

Average income --- Between-group inequality --- Decomposable inequality measures --- Decomposition analysis --- Decomposition techniques --- Economic development --- Economic inequality --- Empirical application --- Equity and Development --- Household data --- Income --- Income distribution --- Income inequality --- Income levels --- Inequality --- Inequality decomposition --- Inequality measurement --- Inequality will increase --- Policy research --- Population share --- Population sub-groups --- Population subgroup --- Poverty Impact Evaluation --- Poverty Reduction --- Rural Poverty Reduction --- Services & Transfers to Poor

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Development aid and policy discussions often assume that poorer countries have less internal capacity for redistribution in favor of their poorest citizens. The assumption is tested using data for 90 developing countries. The capacity for redistribution is measured by the marginal tax rate on those who are not poor by rich-country standards that is needed to cover the poverty gap or to provide a poverty-level of basic income, judged by developing-country standards. For most (but not all) countries with annual consumption per capita under USD 2,000 (at 2005 purchasing power parity) the required tax burdens are found to be prohibitive-often calling for marginal tax rates of 100 percent or more. By contrast, the required tax rates are quite low (1 percent on average) among all countries with consumption per capita over USD 4,000, as well as some poorer countries. Most countries fall into one of two groups: those with little or no realistic prospect of addressing extreme poverty through redistribution from the "rich" and those that would appear to have ample scope for such redistribution. Economic growth tends to move countries from the first group to the second. Thus the appropriate balance between growth and redistribution strategies can be seen to depend on the level economic development.

Average income --- Debt Markets --- Developing countries --- Developing country --- Development policy --- Development research --- Economic development --- Economic growth --- Emerging Markets --- Finance and Financial Sector Development --- Income redistribution --- Inequality --- Law and Development --- Macroeconomics and Economic Growth --- Marginal tax --- Marginal tax rate --- Marginal tax rates --- Mean income --- Policy research --- Poor countries --- Poverty gap --- Poverty line --- Poverty Monitoring and Analysis --- Poverty Reduction --- Poverty Reduction Strategies --- Private Sector Development --- Pro-Poor Growth --- Redistributive policies --- Reducing poverty --- Rich countries --- Rural Development --- Rural Poverty Reduction --- Services and Transfers to Poor --- Tax Law --- Taxation and Subsidies