Global Income Inequality

Global inequality is a relatively recent topic. It was not until the early 1980s that the first calculations of inequality across world citizens were done.1 This is because in order to calculate global inequality, one needs to have data on (within-) national income distributions for most of the coun-tries in the world, or at least for most of the populous and rich countries. But it is only from the early- to mid-1980s that such data became available for China,2 the Soviet Union and its constituent republics and large parts of Africa. Before we move to an analysis of global inequality, however, it is useful to set the stage by delineating what topics we shall be concerned with and what not. This is necessary precisely because of the relative underdevelopment of the topic, reflected in the fact that the same or sim-ilar terms are often used in the literature to mean different things. We need to distinguish between inequality among countries ’ mean incomes (inter-country inequality or Concept 1 inequality as dubbed by Milanovic, 2005), inequality among countries ’ mean incomes weighted by countries’ populations (Concept 2 inequality), and inequality between world individ-uals (global or Concept 3 inequality). Concept 1 inequality deals with convergence and divergence of coun-tries ’ incomes, and although at first this line of work was couched in inequality terms (see Baumol, 1986), most of the later work used cross-WORLD ECONOMICS • Vol. 7 • No. 1 • January–March 2006 13