December 16, 2017

On December 14, 2017 renowned economists Emmanuel Saez, Gabriel Zucman, Facundo Alvaredo, Lucas Chancel and Thomas Piketty published a comprehensive and exhaustively researched World Inequality Report. Here’s a summary of what they found.

Income inequality has increased in nearly all world regions in recent decades, but at different speeds.

In 2016 the share of total national income by the top 10% income share was

• 61% in the Middle East
• 55% in sub-Saharan Africa, Brazil and India
• 47% in US-Canada
• 46% in Russia
• 41% in China
• 37% in Europe

Of particular interest:

• The bottom 50% income share decreased from more than 20% in 1980 to 13% in 2016.
• Since 1980 the global top 1% earners has captured twice as much of the growth in global income as the 50% poorest individuals; nevertheless the latter enjoyed important growth rates.
• The global middle class (which contains all of the poorest 90% income groups in the U.S. and the European Union has been squeezed.
• Income growth has been sluggish or even zero for individuals with incomes between the global 50% and top 1% groups. This includes all North American and European lower and middle income groups.
• Since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging. While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries: governments have become poor.

Their recommendations to tackle the growth of inequality:

• Pass progressive income tax reforms.
• Combat tax evasion and financial opacity.
• Create a global financial register recording the ownership of equities, bonds, and other financial assets.
• Achieve more equal access to education and well-paying jobs

• Increase government investment, particularly difficult since governments in rich countries have become poor and heavily indebted over the past decades.