World Inequality Report 2022
This report was published by the World Inequality Lab at the Paris School of Economics on December 7, 2021. It is written by notable economists Lucas Chancel and Thomas Piketty from the Paris School of Economics, and Emmanuel Saez and Gabriel Zucman from the University of California, Berkeley. It presents data contributed by over 100 researchers from across the world on global inequality and factors that contribute to it such as global wealth, income, gender and ecology. This is the second World Inequality Report – the first was published in 2018 – and includes a foreword by economists and Nobel-laureates Esther Duflo and Abhijit Banerjee.
The report highlights the income and wealth inequalities that have increased worldwide since the 1980s, largely due to the economic deregulation and liberalisation programmes implemented across nations. It notes that the rise in inequality has been striking in countries such as the United States, Russia and India, and relatively lower in European countries and China. The report states: “inequality is not inevitable, it is a political choice.”
The report states that the richest 10 per cent of the global population owns 52 per cent of the world’s income and 76 per cent of the global wealth. In contrast, the poorest half of the population earns as little as 8.5 per cent of the global income and owns just about two per cent of the global wealth.
Over the past two decades, inequality has increased within most nations while disparities among countries have declined. In 1980, the average income of the richest 10 per cent of countries was 50 times that of the poorest 50 per cent. This dropped to 40 times by 2020.
In 1980, the average income of the wealthiest 10 per cent of the population across countries, was 8.5 times greater than the average income of the poorest 50 per cent. This gap increased to 15 times by the year 2020.
The report notes the Middle East and North Africa (MENA) region to be the most unequal in the world, where the top 10 per cent of the population earns around 58 per cent of the total income. Europe, on the other hand, is the most equal region in the world where the richest 10 per cent of the population holds 36 per cent of the total income.
In India, the richest 10 per cent of the population holds 57 per cent of the national income, while the poorest 50 per cent earns only 13 per cent of it. Moreover, the richest one per cent holds a massive 22 per cent of the national income. “India stands out as a poor and very unequal country, with an affluent elite” – says the report.
As of 2021, the ‘average national income’ of an adult in India is stated to be Rs. 204,200. While the poorest 50 per cent of the population accounts for an average national income of Rs. 53,610, the richest 10 per cent earns about 20 times more at Rs. 1,166,520.
Globally, the report highlights, the female share in total income has increased from about 31 per cent in 1990 to 35 per cent in 2020. On average, men earn about twice as much as women across the globe. The richest one per cent in Spain and Britain include more females than countries such as the United States which was one of the foremost voices for women’s empowerment in the 20th century.
Gender disparities in India are exceptionally high. The female labour income is 18.3 per cent of the country’s total labour income – one of the lowest in the world. This, despite a significant increase of 7.7 per cent since 1990.
The report states that inequalities in global income and wealth are inextricably linked to ‘ecological inequalities’ and disparities in countries’ contribution to climate change. On average, humans emit 6.6 tonnes of carbon dioxide equivalent per capita in a year. The top 10 per cent of carbon dioxide emitters contribute to nearly 50 per cent of the total emissions, while the bottom 50 per cent emits only 12 per cent of the total carbon dioxide emissions.
Countries have become remarkably wealthier in the last 40 years, but their governments have become poorer in comparison. In rich countries, the share of wealth held by public authorities is close to zero or negative, implying that the entire wealth is in private hands. This rise in private wealth is reflected in the total household wealth – an individual’s financial and non-financial assets, not including debt – possessed by billionaires which increased from one per cent in 1995 to 3.5 per cent in 2021. The steepest increase in the global wealth possessed by billionaires was observed during 2020, during the Covid-19 pandemic.
The report suggests that levying a moderate progressive wealth tax – an annual tax imposed on the net wealth, above a certain limit, of a household or an individual – on global multimillionaires is a viable solution to overcome the challenges related to wealth and income inequalities in the 21st century. The revenue thus generated can be used by governments in education, health and sustainable development.
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Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman
World Inequality Lab, Paris
07 Dec, 2021