Home / Eugenio Lilli / How has global economic inequality evolved in recent decades?

 

The 2018 World Inequality Report is finally out.

This comprehensive report shows how global inequality has evolved from the 1980s to present day. The report reveals that income inequality has recently increased in nearly all world regions, although at different speeds. That inequality levels are significantly different, even among countries that share similar levels of development, points to the important roles that national policies and institutions have in shaping inequality.

Among the report’s main findings:

-Since 1980, the richest 0.1% of the world’s population (about 7 million) have increased their combined wealth by as much as the poorest 50% (about 3.8 billion). Meanwhile, the global middle class (which contains all of the poorest 90% income groups in the European Union and the United States) has been squeezed.

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-The combination of large privatizations and increasing income inequality within countries has fueled the rise of wealth inequality among individuals. In Russia and the United States, the rise in wealth inequality has been extreme. In the United States the richest 1% accounted for 39% of the nation’s wealth in 2014 [the latest year available], up from 22% in 1980. Whereas in Europe it has been more moderate. Wealth inequality has not yet returned to its extremely high early-twentieth-century level in rich countries.

Is increasing inequality inevitable?

The report argues it is not. Especially if national governments acted to bring in progressive income tax. According to the report, such a move would not only reduce post-tax inequality but also shrink pre-tax inequality “by discouraging top earners from capturing higher shares of growth via aggressive bargaining for higher pay.”

Moreover, the report maintains that taxation alone is not enough to tackle economic inequality as the wealthy are best placed to avoid and evade taxes, as evidenced by the recent investigation into the Panama Papers. In fact, a tenth of the world’s wealth is said to be held in tax havens.

What about the United States?

Well, according to a recent article published in the New Yorker, the final Republicans’ tax bill “is a recipe for even more inequality”. Read the original article here.

You can also access the full 2018 World Inequality Report here.

 

UCD: MA in American Politics and Foreign Policy

 

UCD: Graduate Diploma in American Politics & Foreign Policy

 

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