Decomposing Global Inequality

This paper provides an intuitive additive decomposition of the global income Gini coefficient with respect to differences within and between countries. In 2005, nearly half the total global income inequality is due to income differences between Europeans and North Americans on the one side and inhabitants of Asia on the other, with the China-USA income differences alone accounting for six percent of global inequality. Historically, income differences between Asia and Europe have driven a large part of global inequality, but the quantitative importance of within-Asia income inequality has increased substantially since 1950.