Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons income inequality has increased rapidly and the Gini coefficient is now almost 0.5. This paper evaluates the degree of income inequality from the perspectives of people's subjective well-being and government concerns. It poses the following question: has income inequality peaked? It also discusses the policy implications of the analysis. The concluding comments of this paper propose a research agenda and suggest possible lessons from China's experience that may be useful for other developing countries.

Gini coefficient --- Household surveys --- Income inequality --- Macroeconomics and Economic Growth --- Social instability --- Subjective well-being --- China

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper presents a new methodology to measure inequality that optimally combines household survey information and tax records to construct a complete income distribution. Combining the two data sources is necessary because, on the one hand, household surveys do not accurately represent the wealthiest segment of the population, while tax records do; on the other hand, the opposite is true for the lower end of the income distribution: tax records only include incomes above a certain threshold. The key innovation of the proposed methodology-and the main difference from the existing literature-is the choice of an optimal income threshold born The Gini coefficient for the population is then computed combining the conditional income distributions for incomes below b (using household survey data) and above b (using tax records). Central to this methodology is the fact that b is not chosen arbitrarily: it should be determined in such a way as to minimize reliance on household survey data to compute the top of the income distribution. In practice, the optimal b corresponds to the minimum income level that triggers mandatory tax filing. The proposed methodology is applied to the case of Colombia.

Emerging Markets --- Gini Coefficient --- Household Surveys --- Income Distribution --- Inequality --- Inequality Measurement --- Optimal Income Threshold --- Poverty Diagnostics --- Poverty Impact Evaluation --- Tax Law

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper studies future poverty, inequality, and shared prosperity outcomes using a panel data set with 150 countries over 1980-2014. The findings suggest that global extreme poverty will decrease in absolute and relative terms in the period 2015-2030. However, absolute poverty is likely to increase by 2030 in resource-output oriented countries and economies with low rates of output per capita growth. Countries with high growth rates of output are expected to achieve poverty levels below 3 percent by 2030. Global and country aggregations show a decrease in income inequality by 2030; though, significant downside risks could increase wealth inequality in high- and low-output growth economies by 2030. Substantial uncertainty, as measured by the variability of the simulated outcomes, exists on shared prosperity gaps across the studied country typologies.

Economic Growth --- Forecasting --- Gini Coefficient --- Income Distribution --- Income Inequality --- Inequality --- Macroeconomics and Economic Growth --- Natural Resources --- Poverty --- Poverty Reduction --- Shared Prosperity --- Simulations --- Uncertainty

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Suppose that all people in the world are allocated only two characteristics: country where they live and income class within that country. Assume further that there is no migration. This paper shows that 90 percent of variability in people's global income position (percentile in world income distribution) is explained by only these two pieces of information. Mean country income (circumstance) explains 60 percent, and income class (both circumstance and effort) 30 percent of global income position. The author finds that about two-thirds of the latter number is due to circumstance (approximated by the estimated parental income class under various social mobility assumptions), which makes the overall share of circumstance unlikely to be less than 75-80 percent. On average, "drawing" one-notch higher income class (on a twenty-class scale) is equivalent to living in a 12 percent richer country. Once people are allocated their income class, it becomes important, not only whether the country they are allocated to is rich or poor, but whether it is egalitarian or not. This is particularly important for the people who "draw" low or high classes; for the middle classes, the country's income distribution is much less important than mean country income.

Economic Theory and Research --- Gini coefficient --- Income --- Income differences --- Income distribution --- Incomes --- Inequality --- Macroeconomics and Economic Growth --- Mean income --- Policy Research --- Poverty Diagnostics --- Poverty Impact Evaluation --- Poverty Reduction --- Relative position --- Social mobility --- Social Protections and Labor

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Suppose that all people in the world are allocated only two characteristics: country where they live and income class within that country. Assume further that there is no migration. This paper shows that 90 percent of variability in people's global income position (percentile in world income distribution) is explained by only these two pieces of information. Mean country income (circumstance) explains 60 percent, and income class (both circumstance and effort) 30 percent of global income position. The author finds that about two-thirds of the latter number is due to circumstance (approximated by the estimated parental income class under various social mobility assumptions), which makes the overall share of circumstance unlikely to be less than 75-80 percent. On average, "drawing" one-notch higher income class (on a twenty-class scale) is equivalent to living in a 12 percent richer country. Once people are allocated their income class, it becomes important, not only whether the country they are allocated to is rich or poor, but whether it is egalitarian or not. This is particularly important for the people who "draw" low or high classes; for the middle classes, the country's income distribution is much less important than mean country income.

Economic Theory and Research --- Gini coefficient --- Income --- Income differences --- Income distribution --- Incomes --- Inequality --- Macroeconomics and Economic Growth --- Mean income --- Policy Research --- Poverty Diagnostics --- Poverty Impact Evaluation --- Poverty Reduction --- Relative position --- Social mobility --- Social Protections and Labor