The first World Inequality Report has been released by the World Inequality Lab in the Paris School of Economics’s WID.world Conference.

The report is available on the World Wealth and Income Database website.

Key results of the report include:

  • Strikingly, since 1980 the richest 1% captured twice as much as the poorest 50% of the world’s population. In other terms, since 1980, 27% of all new income generated worldwide were captured by the richest 1%, while the poorest 50% of the world’s population captured only 13% of total growth. These figures are brought into sharp contrast considering the top 1% currently represents 75 million individuals while the bottom 50% represents 3.7 billion individuals. The population in between, largely comprised of lower- and middle-income earners in North America and Europe, experienced sluggish or even zero income growth rates.
  • Since 1980 there have been large shifts in the ownership of capital. Who owns this capital is crucial in determining inequality. Net private capital–the assets of individuals minus their debts–has risen enormously in recent decades, but conversely, net public capital–the assets of governments minus their debts–has declined in nearly all countries since the 1980s due to large scale privatizations and rising public debts. Public capital is now approaching or below zero in rich countries. This exceptional situation by historical standards has strong implications on policy. In particular, it becomes extremely challenging for governments to invest in education, healthcare or environmental protection.
  • Wealth inequality among individuals also increased sharply since 1980. Significant increases in top wealth shares have been experienced in China and Russia following their transitions from communism to more capitalist economies. The top 1% wealth share doubled in both China and Russia between 1995 and 2015, from 15% to 30% and from 22% to 43%, respectively.
  • Global income and wealth inequality will steadily rise if countries continue to follow the same trajectory they have been on since 1980, despite strong growth in emerging countries. By 2050, the share of global wealth held by the world’s 0.1% richest (representing 7.5 million individuals today) be equal to that of the middle class (3 billion individuals).
  • However, rising global inequality is not inevitable in the future and limiting it will have tremendous impacts on global poverty eradication. If all countries follow the same inequality trend as Europe since 1980, the incomes of the bottom half of the world population could rise from €3 100 in 2017 to €9 100 in 2050. Alternatively, if countries were to follow the U.S. trend, the incomes of the bottom 50% would rise to just €4 500 by 2050.

Comments are closed.