Report finds that income inequality in India has reached historically high levels, as the top 0.1% of earners have captured more growth than all of those in the bottom 50% combined
New Delhi: Economic inequality is widespread and has been growing since the 1980s, calling economic growth policies around the world into question, according to new research from the World Inequality Lab. The study findings are detailed in the first World Inequality Report.
The research relies on the most extensive database on the historical evolution of income and wealth inequality. It aims to contribute to a more informed global democratic debate on economic inequality by bringing the most up-to-date and comprehensive data to the public discussion. The report was coordinated by economists Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman.
Thomas Piketty, coordinator of the report, stressed: “For the first time ever, this report examines how global growth has been shared among individuals in the entire world since the 1980s, with a particular focus on emerging countries where inequality data had previously been sparse or nonexistent.”
The primary research findings indicate that income inequality has increased in nearly all world regions in recent decades, though at different speeds, highlighting the important roles of governments to mitigate inequality. Since 1980, income inequality has increased rapidly in North America, China, India, and Russia, while growing moderately in Europe. However, there are exceptions to this pattern: in the Middle East, sub-Saharan Africa, and Brazil, income inequality has remained relatively stable, at extremely high levels.
Lucas Chancel, general coordinator of the report, emphasized: “The fact that inequality trends vary so greatly among countries, even when countries share similar levels of development, highlights the important role of national policies in shaping inequality. For instance, consider China and India since 1980: China recorded much higher growth rates with significantly lower inequality levels than India. The positive conclusion of the World Inequality Report is that policy matters, a lot.”
The report also reveals the dramatic decline in the net wealth of governments over the past decades and the challenges this poses for tackling inequality. Based on the data, the report discusses promising options to tackle income and wealth inequality—starting with the importance of economic data transparency.
Gabriel Zucman, coordinator of the report, said: “The establishment of a global financial registry to record the ownership of financial assets would deal severe blows to tax evasion and money laundering, and would enhance the effectiveness of progressive taxation, which is an essential tool in reducing economic inequality.”
The report stresses the need for more ambitious policies to democratize access to education and well-paying jobs in rich and emerging countries alike. Public investments in health and environmental protection are also necessary to empower younger generations. To finance these investments in the future, capital taxes on the wealthiest or debt relief have regularly been used by governments throughout history.
Key results of the report include the following:
Emmanuel Saez, coordinator of the report, stressed: “The combination of privatizations and increasing income inequality has fueled the rise of wealth inequality—within countries and at the global level, private capital is increasingly concentrated among a few individuals. This rise was extreme in the U.S., where the share of wealth held by the top 1% rose from 22% in 1980 to 39% in 2014.”
The data presented in the report combines in a systematic and transparent manner all available economic data sources, including household surveys, tax receipts, and income and wealth national accounts (including offshore leaks, when available). This enterprise relies on the analysis of more than 175 million data points on inequality.
Facundo Alvaredo, coordinator of the report, said: “This enterprise relies, in one way or another, on the inequality statistics collected in WID.world −The World Wealth and Income Database− since its inception as the World Top Incomes Database in 2011. These databases would not have been possible without the cooperation of more than 100 researchers around the world.”
World Inequality Report 2018 Highlight
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