⚖️ Global inequality decreases both between and within countries

• Global inequality has decreased dramatically since the 1980s.
• Inequality within countries has stopped increasing and has decreased over the last decade.
• Poverty is decreasing faster than previously estimated, even at higher poverty thresholds.

Reduced inequality within countries

A new study by researchers at the Federal Reserve Bank of New York presents a method for better estimating income distribution within countries. The method adjusts for underreporting of income in household surveys, especially among high-income earners.

Previously, there have been conflicting reports on whether inequality within countries is increasing or decreasing. Tax data has suggested increasing inequality, while household surveys have shown decreasing inequality. The new method attempts to bridge this difference.

The study reaches several interesting conclusions:

• Global inequality has decreased since the 1980s, confirming previous research.
• Inequality within countries has stopped increasing and has decreased over the last decade. This applies to several large countries such as China, India, and Indonesia.
• Poverty is decreasing faster than previously estimated, even at higher poverty thresholds. At the World Bank's poverty thresholds of $3.65 and $6.85 per day, poverty has decreased to 30% and 50% of 1990 levels, respectively.

A more equal and richer world

"Our message is an optimistic one. Not only has inequality fallen dramatically across countries, as has been recognised now for decades, but it has also stopped rising and started declining on average within countries as well. Both within- and between-country inequality are helping global inequality decline" the researchers write.

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