World_Income_Inequality_1820-2000 - World Income Inequality...

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1 World Income Inequality 1820-2000 Joerg Baten, Peter Foldvari, Bas van Leeuwen and Jan Luiten van Zanden First and very preliminary draft Correspondence: [email protected] 1. Introduction The aim of this paper is to present a new dataset of global inequality between 1820 and the present, based on the available historical evidence, and to tentatively analyse some of the results that emerge from these data. The importance of the subject hardly needs to be stressed: the enormous increase of inequality on a global scale is one of the most significant – and worrying - features of the development of the world economy in the past 200 years. For this reason, the subject has become one of the most discussed topics in the social sciences; in particular the debate on the measurement and interpretation of recent trends in global inequality – is it still increasing? and why or why not? – has attracted considerable attention (Deininger and Squire, 1996; Jones, 1997; Bourguignon and Morrison, 2002; Milanovic, 2007 for a review of the debate). Economic historians have also intensely discussed the long term trends in the world that lead to the growing income disparities between nations and changed patterns of inequality within nations, although often using other concepts (such as ‘the Great Divergence’). We argue, however, that we lack the historical data to really analyse these patterns of changing global inequality in detail. The one paper that has attempted to do this, Bourguignon and Morrison’s seminal AER 2002 article, is for the period before 1950 largely based on the assumption that income inequality within countries is unchanging. They extrapolate their estimates of income inequality in certain periods to cover much longer time periods, as a result of which, we think, changes in income inequality within countries are clearly underestimated. For large parts of the world the result is that estimates from the post 1914 or even the post 1945 period are used to infer income inequality in the 19 th century, and that, in other words, inequality within countries is assumed to have remained constant. For Latin America and Africa B & M rely completely on 20 th century data to estimate inequality in the 19 th century; for Asia they have in total four historical estimates (in fact often very partial estimates): one for China in 1890, two for Indonesia and one for Japan. The dataset for Europe and North America is somewhat better, but also uses only part of the evidence available. For a large majority of the world’s population, and almost all people living in the ‘developing countries’, their estimates are based on almost no historical evidence, implying that we really cannot rely on their work to analyse the long term patterns of global inequality. Moreover, scholars interested in the question whether different levels of inequality may have affected the way in which countries participated in the Great Divergence, cannot use this dataset to analyse such a possible link, as it simply does not have sufficient historical observations to make such an analysis feasible.
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  • Fall '11
  • Arthur
  • Gini coefficient, Household income in the United States, Income inequality metrics, Income distribution, Ginis

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