Volume 7, Issue 1 - Special Issue on Global Inequality

This paper examines the social welfare bases of the measurement of income inequality among the inhabitants of the world. We develop a general family of global inequality indices which encompasses different concepts of global equity, from the cosmopolitan to the nationalist view. The analysis also provides an interpretation of the EU-wide inequality measures adopted in European statistics.

This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. When pensions are not considered a transfer, fiscal policy increases poverty in Brazil (over and above market income poverty) due to high consumption taxes on basic goods. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru.

We introduce two separate datasets [The Global Consumption Dataset (GCD) and The Global Income Dataset (GID)] making possible an unprecedented portrait of consumption and income of persons over time, within and across countries, around the world. The current benchmark version of the dataset presents estimates of monthly real consumption and income for every percentile of the population (a “consumption/income profile”) for more than 160 countries and more than half a century (1960–2015). We describe the construction of the datasets and demonstrate possible uses by presenting some sample results concerning the distribution of consumption, poverty and inequality in the world.

The current era is characterized by simultaneous increase in many countries’ income inequalities and a decline in global inequality. People’s perception of inequality is shown to depend on how much they value absolute income vs. their national income position.

Amartya Sen’s famous study of famines found that people died not because of a lack of food availability in a country but because some people lacked entitlements to that food. Is a similar situation now the case for global poverty, meaning that national resources are available but not being used to end poverty? This paper argues that approximately three-quarters of global poverty, at least at the lower poverty lines, could now be eliminated – in principle – via redistribution of nationally available resources in terms of cash transfers funded by new taxation and the reallocation of public spending. We argue that the findings provide a rationale for a stronger consideration of some national redistribution for purely instrumental reasons: to reduce or end global poverty quicker than waiting for economic growth. We find that at lower poverty lines ending global poverty may now be within the financial capacities of most national governments of developing countries either in the form of potential new taxation or reallocation of existing public finances though this is not the case at higher poverty lines. In summary, reducing global poverty at lower poverty lines is increasingly a matter of national inequality.