Recent Trends in Global Economic Inequality

Abstract

Since the 1980s, globalization has reduced between-country inequality and increased within-country inequality in most countries. There has been a debate about whether global inequality, which combines both between- and within-country inequalities, increased or decreased. With more adequate and updated data over the past two decades, this debate has been settled. Global inequality unmistakably diminished in the age of globalization. Underlying this reduction in aggregate global inequality is the rise of China and India into the middle strata of the global income distribution, income stagnation of the working class in rich countries, and the expansion of internal inequality in poor and rich countries. This shift in global income distribution contributed to new geopolitical conflicts and political backlash against globalization in the developed world. This global distributive politics will in turn determine the future of globalization and shape the trajectory of global income inequality change.