The World Inequality Report 2022, published by France-based World Inequality Lab with scientific assistance from the United Nations Development Program (UNDP), was released in December, 2021. This report presents the most up-to-date and complete data on the various facets of inequality worldwide as of 2021: global wealth, income, gender, and ecological inequality. The analysis is based on several years’ work by more than one hundred researchers from around the world, who contributed to the World Inequality Database, maintained by the World Inequality Lab.
Some Highlights
Very large contemporary income and wealth inequalities An average adult individual earns US$ 23,380 per year (PPP) in 2021 and the average adult owns US$ 1,02,600. These averages hide wide disparities both between and within countries. The richest 10 per cent of the global population takes 52 per cent of global income, whereas the poorest half of the population earns 8.5 per cent of it. An individual from the top 10 per cent of the global income distribution earns about US$ 1,22,100 per year, whereas an individual from the poorest half of the global income distribution makes about US$ 3,920 per year. As for global wealth inequalities, they are even more pronounced than income inequalities. The poorest half of the global population barely owns just 2 per cent of the total, while the richest 10 per cent of the global population own 76 per cent of all wealth. The poorest half of the population owns US$ 4,100 while the top 10 per cent own on average US$ 7,71,300.
Most unequal region and the lowest inequality levels In Europe, the top 10 per cent of income share is around 36 per cent, whereas it reaches 58 per cent in Middle East and North Africa (MENA). There is a diversity of patterns in between these two levels. In East Asia, the top 10 per cent of income share makes 43 per cent of total income and in Latin America, 55 per cent.
Inequalities in average national incomes The global inequalities reveal that national average income levels are poor predictors of inequality among the high income countries like, some in the US are quite unequal while Sweden some are relatively equal. The same is true among low- and middle-income countries, such as Brazil, India, China, Malaysia, and Uruguay.
Inequality: a political choice Since the 1980s, income and wealth inequalities have been on the rise nearly everywhere, following a series of deregulation and liberalisation programmes in different forms, the world over. Some countries have experienced spectacular increases in inequality, such as the US, Russia, and India while European countries and China have experienced comparatively smaller rises. Thus, inequality is a political choice and is not inevitable.
Different levels of contemporary global inequalities Though inequality has increased within most countries, global inequalities between countries have declined. The gap between the average incomes of the richest 10 per cent of countries and the average incomes of the poorest 50 per cent of countries dropped from around 50x to a little less than 40x. Inequalities also increased significantly within countries: the gap between the average incomes of the top 10 per cent and the bottom 50 per cent of individuals within countries almost doubled from 8.5x to 15x.
Richer nations, but poor governments Over the past 40 years, countries have become significantly richer, but their governments have become significantly poorer. In rich countries, the share of wealth held by public sector is close to zero or negative, implying that the totality of wealth is in private sector. The COVID-19 crisis further aggravated the situation as governments had to borrow the equivalent of 10–20 per cent of GDP, essentially from the private sector.
Increased wealth inequalities at the top of distribution The rise in private wealth has also been unequal within countries and at the world level. Global multimillionaires captured a disproportionate share of global wealth growth over the past several decades. On the one hand, the top 1 per cent took 38 per cent of all additional wealth accumulated since the mid-1990s, whereas the bottom 50 per cent took just 2 per cent of it. The wealth of richest individuals grew at 6 to 9 per cent per year since 1995, whereas average wealth has grown at 3.2 per cent per year. Similarly, the share of global wealth, possessed by billionaires, has risen from 1 per cent to over 3 per cent since 1995. The year 2020 marked the steepest increase in global billionaires’ share of wealth on record.
Shrinking wealth inequalities within countries, and the share of bottom 50 Wealth inequality was considerably reduced in Western countries between the early 20th century and the 1980s, but the poorest half of the population in these countries has always owned very little (between 2–7 per cent of the total). In other regions, the share of the bottom 50 per cent is even lower. So, in order to reduce extreme wealth inequalities, much remains to be done in every region of the world.
High gender inequalities and too slow progress within countries In 1990, women’s overall share of total incomes from work was about 30 per cent, which now stands at less than 35 per cent. At present, there is high gender earning inequality, while in a gender equal world, women would earn half, i.e., 50 per cent of all labour income.
Huge inequalities in carbon emissions Global income inequalities are closely related to ecological inequalities and to inequalities in contributions to climate change. Humans emit about 6.6 tonnes of carbon dioxide equivalent (CO2) per capita, per year: the top 10 per cent of emitters are responsible for close to 50 per cent of all emissions, while the bottom 50 per cent produce 12 per cent of the total.
In Europe, the bottom 50 per cent of the population emits around 5 tonnes per year per person; the bottom 50 per cent in East Asia emits around 3 tonnes; and the bottom 50 per cent in North America emits around 10 tonnes. On the other hand, the top 10 per cent in Europe emits 29 tonnes; in East Asia, 39 tonnes; and in North America, 73 tonnes.
Redistributing wealth to invest in the future This report also reviews several policy options for redistributing wealth and investing in the future, which is essential for meeting the challenges of the 21st century. Recent developments in international taxation show that progress towards fairer economic policies is indeed possible at the global level as well as within countries. The report discusses various options to tackle inequality, learning from examples all over the world and throughout modern history.
Indian Scenario
Extreme income inequalities The average national income of the Indian adult population is ðPPP 7,400 or Rs 204,200. The top 10 per cent earns more than 20 times (ðPPP 42,500 or Rs 1,166,520) of what the bottom 50 per cent earns (ðPPP 2,000 or Rs 53,610). The top 10 per cent and top 1 per cent hold respectively 57 per cent and 22 per cent of total national income, while the bottom 50 per cent share went down to 13 per cent. India stands out as a poor and very unequal country, with an affluent elite.
Income inequality in the long run A historical high Indian income inequality was very high during 1858–1947 (British colonial rule), with a top 10 per cent income share around 50 per cent. After independence, socialist-inspired five-year plans led to reducing this share to 35–40 per cent. Since the mid-1980s, deregulation and liberalisation policies led to one of the most extreme increases in income and wealth inequality observed in the world. The top 1 per cent largely benefited from economic reforms, but growth among low- and middle-income groups was relatively slow. Over the past three years, the quality of inequality data, released by the government, considerably deteriorated and made it particularly difficult to assess recent inequality changes.
Wealth inequality Average household wealth is equal to ðPPP 35,000 or Rs 983,010. The bottom 50 per cent own almost nothing, with an average wealth of ðPPP 4,200 or Rs 66,280. The middle class is also relatively poor with an average wealth of only ðPPP 26,400 or Rs 723,930 as compared with the top 10 per cent and 1 per cent who own respectively ðPPP 231,300 or Rs 6,354,070 and Rs 32,449,360.
Gender inequality Gender inequalities are very high, with the female labour income share equal to 18 per cent. This is significantly lower than the average in Asia (21 per cent, excluding China). One of the lowest in the world, this is slightly higher than the average share in the Middle East (15 per cent). The significant increase has been insufficient to lift women’s labour income share to the regional average, observed since 1990.
Carbon inequality A low carbon emitter, India’s average per capita consumption of greenhouse gas is equal to just over 2 tCO2e, which is typically comparable with carbon footprints in sub-Saharan African countries. The bottom 50 per cent, middle 40 per cent, and top 10 per cent respectively consume 1, 2, and 9 tCO2e/capita. A person in the bottom 50 per cent of the population in India is responsible for five times fewer emissions, on average, than the average person in the bottom 50 per cent in the European Union and 10 times fewer than the average person in the bottom 50 per cent in the US.
About the World Inequality Lab
The World Inequality Lab is a research laboratory which focuses on the study of inequality, worldwide. The lab hosts the world inequality database, the most extensive public database on global inequality dynamics. Main missions of the lab are: the extension of the world inequality database; the publication of working papers, reports, and methodological handbooks; and the dissemination in academic circles and public debates. The lab regroups about twenty research fellows, research assistants, and project officers, based at the Paris School of Economics.
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