World Income Inequality in the Global Era: New Estimates, 1990–2008

Several studies have recently found that world income inequality declined during the closing years of the twentieth century. However, these studies feature a number of shortcomings, including the use of outdated national income estimates to measure inequality between countries, as well as sparse data to capture the smaller (but growing) component found within countries. The current study addresses these concerns and offers new estimates of world income inequality based on 151 countries covering 95 percent of the world’s population during the 1990–2008 period. Overall, the results are fairly compatible with prior efforts, lending greater confidence to earlier findings. Nevertheless, the results suggest that prior studies covering the 1990s overestimate the decline in between-country inequality, but underestimate the rise in within-country inequality. Consequently, total inequality did not begin to decline substantially until the post-2000 era. After presenting these estimates, I then examine factors associated with income mobility among the 15,100 subnational percentile groups in my data set. The results suggest that (a) the negative effect of inequality is larger than the positive effect of economic growth among the poorest 25 percent of the world’s population, and (b) late industrialization has contributed to income convergence between countries, while economic globalization has primarily served to stretch income distributions within nations. Keywords: economic growth; globalization; mobility; poverty; world income inequality. Few issues in the field of macro comparative research have generated as much debate as the empirics surrounding world income inequality. Recently, a number of studies have pur-sued various descriptions of global inequality, taking into account the disparities that exist bot