Recent trends in economic inequality
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II. Recent patterns of inequality within countries A. Trends and patterns in income inequality Income distribution has become increasingly unequal in the majority of developed countries and some large developing countries in the last twenty years, but trends differ markedly between countries and regions. Between 1990 and 2012, inequality in disposable income, that is, income after taxes and transfers, increased in 65 out of 130 countries for which data trends are available, as shown in table I.1.4 These countries are home to more than two thirds of the world population. In many of them, inequality has risen more or less continuously. In others, including several countries with economies in transition, inequality trends have followed an N-shape – that is, inequality rose in the 1990s, declined or remained stable in the late 1990s or early 2000s, and began rising again during the 2000s. In the majority of those countries where income inequality has declined, trends have followed an inverted U shape – inequality increased in the early 1990s and started to decline in the late 1990s or early 2000s. However, recent trends differ markedly by region. In general, income inequality has increased in countries and regions that enjoyed relatively low levels of inequality in 1990, and has declined in some countries that still suffer from high inequality. Namely, some large, emerging economies, and the large majority of developed countries, have experienced sharp rises in Gini coefficients since 1990, including Nordic countries with traditionally low levels of inequality. The rise in income inequality has been particularly fast in Eastern Europe. Although Latin America and the Caribbean remains one of the regions with the highest levels of income inequality apart from Africa, the Gini coefficient declined between 1990 and 2012 in 14 out of the 20 Latin American countries for which data are available, including Brazil, which has traditionally had very high levels of inequality (Solt, 2013). According to the information available, the gap between the rich and the poor declined in many African countries as well, including very high-inequality countries such as Botswana, Lesotho and Swaziland, but continued to increase relatively quickly in South Africa during the post-apartheid period, despite continued economic growth and the expansion of social assistance programmes. In 2008, South Africa’s Gini coefficient stood at around 70 (World Bank, 2012a).5 4 For an overview of data and indicators of economic inequality, see annex to Chapter 1. The description of recent inequality trends focuses on the period 1990-2012 so as to ensure maximum data coverage and reliability–for instance, inequality indicators are not widely available in countries of Central Asia and Eastern Europe before 1990; where they are available, the estimated measurement errors are relatively high. For more information, see Solt (2009). Data available from: http://www.siuc.edu/~fsolt/swiid/swiid.html. 5 Inter-racial inequality has remained high in South Africa but fell during this period; meanwhile, intra-racial income inequality increased, especially in urban areas (Leibbrandt