- Income Inequality across Regions
The recent publication of the Standardized World Income
Inequality Database (SWIID) (Solt 2009) allows us to compare the
evolution of income inequality in a sample of 141 countries from
1990-2008 using Gini indices (see Box 2 for a discussion on Gini
indices).
Box 2. Gini Indices and Caveats
The Gini index is the most commonly used measure of income
inequality. It is derived from the Gini coefficient, which is based on
the Lorenz curve whereby 0 is perfect equality (e.g. each person has
exactly the same income) and 1 is perfect inequality (e.g. one person
has all income).Selecting Gini indices to gauge national income inequality can be just
as controversial as selecting distribution estimates, especially when
comparing across countries (See Annex 1). In fact, most of the
contention revolves around the same issues: differing household
survey methodologies within and across countries—which are the
basis for estimating Gini coefficients—and large data gaps over time.
It is also important to note that Gini indices cannot be compared
globally due to the different assumptions behind their calculations.The SWIID (Solt 2009) is the most comprehensive attempt at
developing a cross-nationally comparable database of Gini indices
across time. The SWIID standardizes Gini estimates from all major
existing resources of inequality data, including UNU-WIDER (2008),
the World Bank’s PovcalNet, the Socio-Economic Database for Latin
America, Branko Milanovic’s World Income Distribution data, and the
ILO’s Household Income and Expenditure Statistics, as well as a host
of national statistical offices and other sources. Overall, the SWIID
includes Gini estimates for gross and net income inequality for 171
countries from 1960 to 2009 and allows us to examine changes in net
income inequality for 132 countries between 1990 and 2008. While this
is, of course, far from the ideal set of Gini indices—all methodology
caveats remain fully valid—it is the best database currently available.The development of Gini indices across regions over the past two
decades reveals mixed trends regarding income inequality (Table