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The Distribution and Redistribution of Income and Wealth: A Global and Historical Perspective

Final Report Summary - DRIWGHP (The Distribution and Redistribution of Income and Wealth: A Global and Historical Perspective)

Income and wealth inequality has widened significantly in many developed countries during the past forty years, particularly in the Anglo-Saxon world. In some countries, e.g. the US, income concentration is now higher than in the early decades of the 20th century. EU trends are less strong, but push in the same direction. At the global level, inequality has risen sharply since 1980, despite strong income growth in China and other Asian countries. Yet, despite these puzzling facts, much research is still needed to understand the forces behind the long run evolution of income and wealth inequality, as well as to measure their consequences.

We proposed to construct a new inequality database that was going to be made public through a dedicated website. In this respect, in December 2015, the previous World Top Incomes Database (WTID, on line between 2011 and 2015) was subsumed into the WID.world the World Wealth and Income Database (relabelled the World Inequality Database in March 2017). In addition to the WTID top income shares series, the first version of WID.world included an updated historical database on the long-run evolution of aggregate wealth-income ratios and on the changing structure of national wealth and national income. The name of the database changed from WTID to WID.world in order to reflect the extension in scope of the database, and the new emphasis on both wealth and income. In January 2017 a new website was launched (www.wid.world) with better data visualisation tools and more extensive data coverage. The World Inequality Lab was also created then, with the mission of maintaining and expanding WID.world coordinating the statistical operations of the network, and publishing the World Inequality Report-WIR (the first volume WIR2018 was released in December 2017). At the moment of writing this report, WID.world provides historical income inequality statistical series for 84 countries, historical wealth inequality statistical series historical for 9 countries, and macroeconomic statistical series (covering both income and wealth whenever and wherever possible) for over 220 countries. This is a permanent endeavour, so we keep updating and extending the coverage of the database in all these dimensions.

Global inequality dynamics involve strong and contradictory forces. We observe rising top income and wealth shares in nearly all countries in recent decades. But the magnitude of rising inequality varies substantially across countries, thereby suggesting that different country-specific policies and institutions matter considerably. High growth rates in emerging countries reduce between-country inequality, but this in itself does not guarantee acceptable within-country inequality levels and ensure the social sustainability of globalization. Access to more, better and transparent data (administrative records, surveys, more detailed and explicit national accounts) is critical to monitor global inequality dynamics, as this is a key building brick both to properly understand the present as well as the forces which will dominate in the future, and to design policy responses.