Presentation of the World Inequality Report 2018 Coordinated by: - PowerPoint PPT Presentation

Presentation of the World Inequality Report 2018 Coordinated by: Presentation speakers: Facundo Alvaredo Lydia Assouad Lucas Chancel Lucas Chancel Thomas Piketty Clara Martinez-Toledano Emmanuel Saez Thomas Piketty Gabriel Zucman World InequalityLab | December 14th, 2017

World In Wo Ineq equality Re Report 2018: hi highl hlight hts base on the historical Report based on WI WID.world , the mo most ex exten ensive e da databa § evolution of income and wealth distribution. Project regrouping more than 100 100 rs over 5 continents. 100% rese re searc rchers 100% transparent , open source, reproducible. assessment of globalization in terms of economic in The first sy syst stematic as inequalit ality . § Despite high growth in emerging countries, global inequality increased since 1980. The top op 1% ca captured tw twice as as mu much gl global in income gr growth as as bo bottom 50% 50% . Diverging country inequality trajectories highlight the importance of in instit itutio ional al § changes and po ch political ch choice ces ra rather th than de determini nistic fo forces. This suggests much can be done in the coming decades to promote more equitable growth. 2

This presentation 1. 1. Introduction: the WI WID.world pr project WID.world combines inequality data sources in a consistent way to fill a democratic gap. 2. 2. Global in income in inequalit ality dy dyna namics Global top 1% captured twice as much growth as bottom 50% since 1980. Different national trajectories suggest that the trend was not inevitable. Fo Focus: the Middle East: the wo world’s mo most une unequa qual re region? 3. Public vs. pr 3. private ca capital dy dyna namics Gradual rise in wealth income ratios since 1980s in the context of large transfers of public to private wealth in emerging and rich countries. 4. 4. Global we wealth in inequalit ality dy dyna namics Combination of rising income inequality and fall of public wealth contributed to sharp rise in wealth inequality among individuals. Focus: from aggregate wealth to wealth inequality: illustration with Spain 5. 5. Conclusion: ta tackling in inequalit ality Rethinking the policy cocktail of globalization 3

PART I THE WID.WORLD PROJECT AND THE MEASUREMENT OF ECONOMIC INEQUALITY § The World Inequality Report 2018 seeks to fill a democratic gap and to equip various actors of society with the necessary facts to engage in informed public debates on inequality. § The World Inequality Report 2018 relies on the most extensive database on the historical evolution of income and wealth inequality. Our methodology is fully transparent, open access and reproducible.

History of Hi of the WI WID.worl rld pr project Co Continuation of pi pione neering ng wo work of of Kuznets in the 1950s 1950s an and At Atkinson § in in th the 1970s 1970s co combining fi fiscal and national ac accounts da data Kuznets, 1953 and Atkinson and Harrison, 1978 WI WID.worl rld st started ed wi with th the publicati tion of hi historicalin inequalit ality ser series es § based on ba on top op in income sh shares es ser series es us using ng ta tax da data Piketty 2001, 2003, Piketty-Saez 2003, Atkinson-Piketty 2007; 2010, Alvaredo et al., 2013. In 2011, In 2011, we we re released the he World d Top p In Incomes es Da Database, , gra radually § exten ex ended ed to to over th thirty ty co countries and to we wealth Alvaredo et al., 2013, Saez-Zucman , 2016, Alvaredo-Atkinson-Morelli, 2016, etc. 5

WID.worl WI rld to today Ne New we webs bsite WI WID.worl rld lau launched Ja January 2017: 2017: collab llaborat ativ ive effort § Key no Ke novelty: : we co combine National ac accounts, , ta tax da data and nd su survey eys in in a a § manner à Distributional National Accounts (DINA, cf. Alvaredo sy systematic ma et al. 2016) Th Three ma major extensions unde underwa way § 1. Emerging countries 2. Entire distribution, from bottom to top 3. Wealth distribution and not only income distribution 6

WID.worl WI rld to today Co Constantly ex exten endingda databa base on on the hi historical ev evolution § of of in income an and we wealth • Income shares, averages, thresholds: 70 countries • Wealth income ratios, wealth distribution: 25 countries • Net National Income, CFC, GDP: 180 countries § Op Open ac access, , multi-lin lingual al we webs bsite an and vi visualization to tools Chinese, English, French, Spanish : reach more than 3 3 billion people • § St State of the art to tools fo for in inequalit ality re researc rch • GPINTER package: manipulate distributions online • Stata and R packages: access our data from Stata directly 7

PART II GLOBAL INCOME INEQUALITY DYNAMICS § The top 1% captured twice as much global income growth as the bottom 50% since 1980 § We observe rising inequalitybetween world individuals, despite growth in the emerging world § Different national trajectories show rising global inequalityis not inevitable

Towards a To a glo lobal al dis istrib ibutio ion of in income an and we wealth § Of Official st statist stics do do no not pr provide de an an ad adequat ate pi pictur ure of of glob obal in inequalit ality § Official data mostly based on self-reported survey & underestimates inequality § No global distribution based on systematic combination of top and bottom income or wealth data (National accounts, tax, surveys and wealth rankings) § WI WID.worl rld fo follows a a st step ep-by by-st step ep ap approac ach to towards a a consis istent glo lobal al distribut di bution n of in income an and we wealth § We only aggregate countries for which we have consistent series, in line with Distributional National Accounts § We confirm and amplify the « Elephant curve » pattern (Lakner-Milanovic) with more systematic tax data and larger country coverage 10

To Towards a a glo lobal al dis istrib ibutio ion of in income an and we wealth Russia + + + + China Europe USA India Brazil Middle East Global inequality dynamics 11

▶ Inequality within world regions varies greatly. In 2016, the share of total national ▶ was 37% in Europe, 41% in China, 46% in India, and Russia. Inequality has grown 55% in sub-Saharan Africa, Brazil, and inequality marks the end of a postwar egali unequal region according to our estimates, tarian regime which took different forms in the top 10% capture 61% of national income these regions. Figure E1 Income inequality varies widely across world regions Figure E1 Top 10% national income share across the world, 2016 70% 61% 61% 60% 55% 55% 55% 55% 54% 54% Share of national income (%) 47% 47% 50% 46% 46% 41% 41% 37% 37% 40% 30% 20% 10% 0% Europe China Russia US-Canada Sub- Brazil India Middle East Saharan Africa 12 Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes.

Income inequality rises almost everywhere, but at different speeds Top 10% income shares across the world, 1980–2016: Rising inequality almost everywhere, Top 10% income shares across the world, 1980-2016 60% India Share of national income (%) US-Canada 50% Russia China 40% Europe 30% 20% 1980 1985 1990 1995 2000 2005 2010 2015 13 Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes. ▶ There are exceptions to the general share was close to 10% in both regions in 1980, high levels ( ). Having never gone it rose only slightly to 12% in 2016 in Western through the postwar egalitarian regime, these regions set the world “inequality frontier.” than 20% in 1980 to 13% in 2016 ( ▶ ▶ in the United States is largely due to massive system that grew less progressive despite ▶ a surge in top labor compensation since or highly regulated countries, China, India, saw a lesser decline in its tax progressivity, moderate in China, and relatively gradual in while wage inequality was also moderated India, refmecting different types of deregula by educational and wage-setting policies tion and opening-up policies pursued over the and middle-income groups. In both regions, ▶ The divergence in inequality levels has been has declined but remains particularly strong

Is the world moving towards the high inequality frontier? Top 10% income shares across the world, 1980–2016: Is world inequality moving towards the Top 10% income shares across the world, 1980-2016 70% Middle East 60% Share of national income (%) India Brazil 50% Sub-Saharan Africa 40% US-Canada Russia 30% China Europe 20% 1980 1985 1990 1995 2000 2005 2010 2015 14 Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes. sharply since 1980, despite strong middle-income groups. ▶ The poorest half of the global popula ▶ The rise of global inequality has not been tion has seen its income grow signifjcantly steady. While the global top 1% income share thanks to high growth in Asia (particularly increased from 16% in 1980 to 22% in 2000, it declined slightly thereafter to 20%. The of high and rising inequality within coun income share of the global bottom 50% has tries, the top 1% richest individuals in the world captured twice as much growth tion in between-country average income ). Income growth has been sluggish or even zero for individuals with incomes between the global bottom 50% and top 1% groups. This includes all