The world's 62 richest individuals collectively hold more wealth than the poorest half of the world's population, says an Oxfam report. But is global inequality really running wild? As always, the truth is much more complicated.
For example, the dispersion of equivalised household disposable income (post-tax and transfer incomes, control for household size and composition) for an average advanced economy has increased in recent decades.
However, individual countries' experiences differ enormously, with large increases in inequality recorded in the US, UK, Sweden, Australia and Japan, less marked increases in Italy, Germany and Spain, and no change or even a decrease in inequality in the Netherlands, France and Switzerland.
Trends in economic inequality have also varied significantly following the global financial crisis, but it must be said that over time, advanced economies have, on average, recorded an increase in the gap between rich and poor.
Trends in economic inequality diverge even more across emerging markets. Inequality has risen sharply in Russia, China and Indonesia, while much of South America and Africa have seen a notable reduction in the gap between rich and poor, albeit from a high level.
Meanwhile, global income dispersion, life chances and health also appear to have declined, mainly due to the lift of hundreds of millions of Chinese and Indians out of poverty, although this effect has been partly mitigated by stagnant incomes in the most the world's poor and accelerated income growth for the richest 1% of the world's population.
Curiously, the contrast between shrinking inequality globally and growing inequality in advanced economies has a trivial explanation: globalization, which has allowed skilled labor in Asia to easily replace low-skilled labor in the rich world.
But that is not all. Skills related to technological change have also emptied the middle class in many advanced economies. Immigration may play a role, while the wide variety of national experiences highlight how institutions can amplify or mitigate macro pressures.
Politicians should consider all these nuances so that attempts to reduce inequality are not ineffective or even counterproductive.
