COMPARATIVE ECONOMIC STATISTICS: INCOME DISTRIBUTION AND POVERTY

COMPARATIVE ECONOMIC STATISTICS:
INCOME DISTRIBUTION AND POVERTY

I. Income Distribution Comparisons--equality versus equity

A. Measures of Income Inequality

1. Decile ratio - the share of income received by the richest tenth of the population divided by the share received by the poorest tenth.

2. Lorenz Curves - Illustrates the percentage of income received by cumulative percentages of the population. (See this web site).

3. Gini ratio - Equal to the measured area between the diagonal line of equality and the Lorenz curve, divided by the area of the triangle under the line of equality.

4. Poverty rate - The percentage of the population living below a level of income that provides for basic needs

B. Problems in Making Income Distribution Comparisons -

1. Coverage of the population - data that cover only employed persons or workers will indicate greater equality than data that include retired persons or the unemployed

2. Segmentation of the population - Distribution of income among households can be different from the distribution of income among families or individuals.

3. Definition of income - Only wages? Capital gains? Before or after taxes? Including transfers? Based on consumption patterns rather than income?

C. Luxembourg Income Study and OECD Income Distribution Database - National reporting of income and wealth data make it possible to make comparisons with consistent definitions and coverage and to explore the impact of taxation and social expenditure policies.

Inequality Indices in 2010 Based on the
Luxembourg Income Study Database
(ordered by Gini Ratio)

	Gini Coefficient	Percentile Ratio (90/10)	Relative Poverty Rate (50%)
Norway	0.243	2.9	7.4
Iceland	0.245	2.8	6.1
Denmark	0.248	2.9	6.3
Slovenia	0.252	3.3	9.8
Czech Republic	0.256	3.1	6.3
Netherlands	0.257	3.0	5.2
Finland	0.261	3.2	7.2
Slovakia	0.263	3.3	8.0
Luxembourg	0.269	3.3	6.1
Hungary	0.278	3.5	7.9
Germany	0.286	3.6	9.5
France	0.289	3.6	9.1
Ireland	0.294	3.8	9.4
Poland	0.310	3.9	9.6
Canada	0.317	4.2	12.5
Taiwan	0.317	4.4	11.8
Serbia	0.324	4.9	14.6
Estonia	0.325	4.5	11.8
Italy	0.327	4.4	12.5
Australia	0.330	4.5	13.9
Greece	0.333	4.4	13.5
Spain	0.333	5.1	15.2
UK	0.335	4.2	9.8
Russia	0.338	4.7	12.5
USA	0.367	5.7	16.9
Israel	0.377	6.1	20.3
Uruguay	0.405	6.2	15.2
Georgia	0.437	8.2	19.5
Mexico	0.455	9.0	20.1
Brazil	0.460	8.4	19.7
Peru	0.470	13.9	25.3
Panama	0.471	11.0	23.1
Colombia	0.482	10.0	19.6
South Africa	0.585	22.6	25.7

Gini Ratios 2016-2018 (%) World Bank
Czech Republic	24.9
Belarus	25.2
Ukraine	26.1
Norway	27
Kyrgyz Republic	27.7
Netherlands	28.5
Denmark	28.7
Sweden	28.8
Poland	29.7
Estonia	30.4
France	31.6
Germany	31.9
Canada	33.3
Armenia	34.4
Nigeria	35.1
Sierra Leone	35.7
Vietnam	35.7
Georgia	36.4
Thailand	36.4
Russian Federation	37.5
Indonesia	37.8
China	38.5*
El Salvador	38.6
Uruguay	39.7
Iran, Islamic Rep.	40.8
United States	41.1
Argentina	41.4
Turkey	41.9
Bolivia	42.2
Peru	42.8
Uganda	42.8
Dominican Republic	43.7
Zimbabwe	44.3
Chile	44.4
Lesotho	44.9
Ecuador	45.4
Mexico	45.4
Paraguay	46.2
Costa Rica	48
Colombia	50.4
Angola	51.3
Honduras	52.1
Brazil	53.9

These are World Bank estimates. According to estimates in the article, "Income Inequality in Today’s China," by Yu Xie and Xiang Zhou in PNAS, April 28, 2014, the Gini ratio for China is much higher - about 52%.

World Bank projections indicate that the gains of recent decades are being reversed strongly by the COVID-19 pandemic.

II. Wealth Distribution Comparisons

A. Generally much more unequal than income because wealth is cumulative.

B. Data sources - Data are available for a much smaller number of countries than income, because many countries have income taxes and income surveys, but fewer have wealth taxes and surveys. OECD issued a set of Guidelines for micro statistics on household wealth in 2013, and the Luxembourg Income Study was expanded to include wealth surveys, so more data have become available in very recent years.