Patterns of income distribution among world regions

Individual country ratios of income shares of the highest 20 percent of income recipients to that of the lowest 20 percent are reviewed to identify proximate relationships between key economic variables and broad patterns of income inequality across the world. First, the importance of the question of the relationship between income distribution and economic development is highlighted. Second, the Kuznets inverted U hypothesis suggesting a relationship during the process of development between the degree of inequality in income distribution and the level of per capita income is summarized. Then, statistical and other problems that arise when measuring income distribution and considering changes taking place in income inequality are discussed. Finally, patterns of income distribution in a large sample of countries are presented with the view to identifying relationships between income inequality and levels of living, rates of growth, and world regions. Income distribution patterns are found to be diverse across countries and unrelated in any obvious way to per capita GDP or the rate of GDP growth. Some limited relationship may be seen when the country data are arranged by geographic region. These results imply that there is no inherent conflict between the objective of faster economic growth and that of a more even distribution of income over the longer-term.