What if Income Inequality is a Global Issue?

(25 October 2021) The Gini index is one of the traditional measures used to estimate inequality in income distribution at a country level. It shows how far the income distribution between different subsets of a population is from income equality. To estimate a Gini index, national statistical offices (NSOs) need to collect data on personal income for each percentile of population. In this dashboard, the Knoema team uses the same approach to estimate inequality of income distribution at a global level.

• We used data from the International Monetary Fund on GDP per capita and population for 194 countries, rather than data on per capita income of population percentiles used by NSOs at a country level, to generate a cross-country comparison that reflected countries' shares in the global population.
• An analysis of a Lorenz curve using estimated 2019 cross-country data shows that global inequality in income distribution is equivalent to a Gini index value of 52 — which indicates extremely high inequality. The poorest 50% of the global population accumulate about 10% of global income, while the richest 20% of the world's population accumulate 70% of global income.
• To decrease income inequality, individual countries use the mechanisms of fiscal redistribution of income from the richest to the poorest. The same mechanism could hypothetically be implemented at a global level. For example, a 10% global income tax for the 30 richest countries would yield an equivalent of 4.5 trillion international dollars, which could double the per capita income for the 1.3 billion population in the 54 poorest countries.