Are Countries becoming Equally Unequal?

Title: Are Countries becoming Equally Unequal?
Format: Journal Article
Publication Date: 2016

Literature on convergence in inequality is sparse and has almost entirely focused on the notion of testing beta convergence in the Gini indices. In this paper, for the first time, we test for sigma convergence in decile income shares across countries. We compile panel data on decile income shares for more than 60 countries over the last 25 years. Regardless of the level of development, within country inequality increased; income shares of the poorest deciles declined and those of the top decile increased significantly. Importantly, the decile income shares exhibited a statistically significant decline in dispersion between 1985 and 2011, providing strong evidence of sigma convergence in inequality. Convergence was more prominent among developing countries and less so among developed countries. The findings are robust to an array of sensitivity tests. Our analysis suggests that cross-country income distributions became more unequal but noticeably similar over time.

External Contributors: Dustin Chambers

Chambers D. and Dhongde S.  “Are Countries becoming Equally Unequal?” Empirical Economics (2016), pp.1-38, Forthcoming

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  • School of Economics