Presentation of the World Inequality Report 2018 Coordinated by: - - PowerPoint PPT Presentation
Presentation of the World Inequality Report 2018 Coordinated by: Presentation speakers: Facundo Alvaredo Lydia Assouad Lucas Chancel Lucas Chancel Thomas Piketty Clara Martinez-Toledano Emmanuel Saez Thomas Piketty Gabriel Zucman World
World InequalityLab | December 14th, 2017
Coordinated by: Facundo Alvaredo Lucas Chancel Thomas Piketty Emmanuel Saez Gabriel Zucman Presentation speakers: Lydia Assouad Lucas Chancel Clara Martinez-Toledano Thomas Piketty
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WID.world combines inequality data sources in a consistent way to fill a democratic gap.
Global top 1% captured twice as much growth as bottom 50% since 1980. Different national trajectories suggest that the trend was not inevitable. Fo Focus: the Middle East: the wo world’s mo most une unequa qual re region?
Gradual rise in wealth income ratios since 1980s in the context of large transfers of public to private wealth in emerging and rich countries.
Combination of rising income inequality and fall of public wealth contributed to sharp rise in wealth inequality among individuals. Focus: from aggregate wealth to wealth inequality: illustration with Spain
Rethinking the policy cocktail of globalization
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Kuznets, 1953 and Atkinson and Harrison, 1978
Piketty 2001, 2003, Piketty-Saez 2003, Atkinson-Piketty 2007; 2010, Alvaredo et al., 2013.
Alvaredo et al., 2013, Saez-Zucman , 2016, Alvaredo-Atkinson-Morelli, 2016, etc.
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3 billion people
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China Europe USA India Russia Brazil Middle East Global inequality dynamics
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▶ Inequality within world regions varies
was 37% in Europe, 41% in China, 46% in 55% in sub-Saharan Africa, Brazil, and unequal region according to our estimates, the top 10% capture 61% of national income
Figure E1 ▶
India, and Russia. Inequality has grown inequality marks the end of a postwar egali tarian regime which took different forms in these regions.
0% 10% 20% 30% 40% 50% 60% 70%
37% 41% 46% 47% 54% 55% 55% 61%
Middle East India Brazil Sub- Saharan Africa US-Canada Russia China Europe
Share of national income (%)
37% 41% 46% 47% 54% 55% 55% 61%
Figure E1 Top 10% national income share across the world, 2016
Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes.
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▶ There are exceptions to the general
high levels ( ). Having never gone through the postwar egalitarian regime, these regions set the world “inequality frontier.”
▶ ▶
moderate in China, and relatively gradual in India, refmecting different types of deregula tion and opening-up policies pursued over the
▶ The divergence in inequality levels has been
share was close to 10% in both regions in 1980, it rose only slightly to 12% in 2016 in Western than 20% in 1980 to 13% in 2016 (
▶
in the United States is largely due to massive system that grew less progressive despite a surge in top labor compensation since saw a lesser decline in its tax progressivity, while wage inequality was also moderated by educational and wage-setting policies and middle-income groups. In both regions, has declined but remains particularly strong
Russia China India US-Canada Europe
Share of national income (%)
20% 30% 40% 50% 60% 2015 2010 2005 2000 1995 1990 1985 1980
Top 10% income shares across the world, 1980–2016: Rising inequality almost everywhere,
Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes.
Top 10% income shares across the world, 1980-2016
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sharply since 1980, despite strong
▶ The poorest half of the global popula
tion has seen its income grow signifjcantly thanks to high growth in Asia (particularly
tries, the top 1% richest individuals in the world captured twice as much growth ). Income growth has been sluggish or even zero for individuals with incomes between the global bottom 50% and top 1% groups. This includes all middle-income groups.
▶ The rise of global inequality has not been
increased from 16% in 1980 to 22% in 2000, it declined slightly thereafter to 20%. The income share of the global bottom 50% has tion in between-country average income
Share of national income (%)
20% 30% 40% 50% 60% 70% 2015 2010 2005 2000 1995 1990 1985 1980 China Middle East Sub-Saharan Africa India Russia US-Canada Europe Brazil
Top 10% income shares across the world, 1980–2016: Is world inequality moving towards the
Top 10% income shares across the world, 1980-2016
Source: World Inequality Report 2018, Figure 2.1.1. See wir2018.wid.world for data sources and notes.
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Income estimates account for differences in the cost of living between countries. Values are net of infmation.
Real income growth per adult (%) Income group (percentile)
0% 100% 50% 150% 200% 250% 100 90 80 70 60 50 40 30 20 10
total income growth by percentile across all world regions, 1980–2016: scaled by population
In this representation of global income inequality dynamics discussed in Chapter 2.1, we scale the horizontal axis by population size, meaning that the distance between different points on the x-axis is proportional to the size of the population of the corre sponding income group. (See
Rise of emerging countries Squeezed bottom 90% In the US & Western Europe Prosperity of the global 1%
Source: World Inequality Report 2018, Appendix Figure A1. See wir2018.wid.world for data sources and notes.
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account for differences in the cost of living between countries. Values are net of infmation. Source: Chancel & Piketty (2017). See wir2018.wid.world for data series and notes.
Real income growth per adult (%)
0% 50% 100% 150% 200% 250% 100 99.9 99 90 80 70 60 50 40 10
Income group (percentile) total income growth by percentile across all world regions, 1980–2016: scaled by share of growth captured
In this representation of global income inequality dynamics discussed in Chapter 2.1, we scale the horizontal axis by the share of growth captured by income group, meaning that the distance between different points on the x-axis is proportional to the share of growth captured by the corresponding income group. (See
Rise of emerging countries Squeezed bottom 90% In the US & Western Europe Prosperity of the global 1% Top 1% captured 27%
Bottom 50% captured 12%
Source: World Inequality Report 2018, Appendix Figure A1. See wir2018.wid.world for data sources and notes.
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growth over the period—that is, as much as fjgures help make sense of the very high growth rates enjoyed by Indians and Chinese sitting at the bottom of the distribution. Whereas growth rates were substantial among the global bottom 50%, this group captured only 14% of total growth, just slightly more than the global top 0.1%—which captured 12% of total growth. Such a small share of total growth captured by the bottom the global level. But this is not the only expla extraordinarily high to dwarf the growth The next step of the exercise consists of adding (140 million), Brazil (210 million), and the Middle East (410 million) to the analysis. These additional groups bring the total population now considered to more than 4.3 billion indi
in Appendix Figure A2.3 is similar to the previous one except that the “body of the elephant” is now shorter. This can be explained Brazil are three regions which recorded low growth rates over the period considered. Adding the population of the three regions also slightly shifts the “body of the elephant” to the left, since a large share of the population of the very poor nor very rich from a global point of
0% 50% 100% 150% 200% 250%
99.999
99.99
99.9 99 90 80 70 60 50 40 30 20 10
Real income growth per adult (%) Income group (percentile)
Squeezed bottom 90% in the US & Western Europe Rise of emerging countries Prosperity of the global 1% Bottom 50% captured 12%
Top 1% captured 27%
total income growth by percentile across all world regions, 1980–2016
Source: World Inequality Report 2018, Figure 2.1.4. See wir2018.wid.world for data sources and notes.
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We start with the distribution of growth in a region regrouping Europe and North America ). These two regions have a total
in Europe and 360 million in North America) and represent most of the population of high- tive per-adult income growth over the 1980– as compared to the global average (+66%). While the bottom 10% income group saw percentile 80 had a growth rate close to the average growth rate. At the very top of the distribution, incomes grew very rapidly; indi viduals in the top 1% group saw their incomes and those in the top 0.01% and above grew How did this translate into shares of growth captured by different groups? The top 1% of earners captured 28% of total growth—that is, as much growth as the bottom 81% of the captured 9% of growth, which is less than the top 0.1%, which captured 14% of total growth however, hide large differences in the captured as much growth as the bottom 51% top 1% captured as much growth as the The next step is to add the population of India The global region now considered repre sents 3.5 billion individuals in total (including 1.4 billion individuals from China and 1.3 billion from India). Adding India and China remarkably modifjes the shape of the global growth curve (
0% 100% 200% 300% 400%
500
99.999
99.99 99.9 99 90 80 70 60 50 40 30 20 10
Real income growth per adult (%) Income group (percentile)
Bottom 50% captured 9%
Top 1% captured 28%
total income growth by percentile in us-Canada and Western europe, 1980–2016
Source: World Inequality Report 2018, Figure 2.1.2. See wir2018.wid.world for data sources and notes.
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Source: World Inequality Report 2018, Figure 2.9.4. See wir2018.wid.world for data sources and notes.
Total in income gr growth by by pe percent ntile in n In India an and China, a, 1980-2016 2016
Top 1% captured 18%
Bottom 50% captured 10%
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The fjrst half of the distribution is now marked by a “rising tide” as total income growth rates increase substantially from the growth rates which go as high as 260%, largely above the global average income growth of 146%. This is due to the fact that
enjoyed much higher growth rates than their
below the richest 1%), income growth was substantially lower than the global average, reaching only 40–50%. This corresponds to the lower- and middle-income groups in rich countries which grew at a very low rates. The extreme case of these is the bottom half of grew at only 3% over the period considered. Earlier versions of this graph have been termed “the elephant curve,” as the shape of
confjrm the share of income growth captured at the top of the global income distribution— a fjgure which couldn’t be properly measured At the top of the global distribution, incomes grew extremely rapidly—around 200% for 0.001%. Not only were these growth rates they also matter a lot in terms of global
Source: WID.world (2017). See wir2018.wid.world for data series and notes.
0% 100% 200% 300% 400% 500
99.999
99.99
99.9 99 90 80 70 60 50 40 30 20 10
Real income growth per adult (%) Income group (percentile)
Bottom 50% captured 14%
Top 1% captured 23%
total income growth by percentile in China, India, us-Canada, and Western europe, 1980–2016
Source: World Inequality Report 2018, Figure 2.1.2. See wir2018.wid.world for data sources and notes.
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growth over the period—that is, as much as fjgures help make sense of the very high growth rates enjoyed by Indians and Chinese sitting at the bottom of the distribution. Whereas growth rates were substantial among the global bottom 50%, this group captured only 14% of total growth, just slightly more than the global top 0.1%—which captured 12% of total growth. Such a small share of total growth captured by the bottom the global level. But this is not the only expla extraordinarily high to dwarf the growth The next step of the exercise consists of adding (140 million), Brazil (210 million), and the Middle East (410 million) to the analysis. These additional groups bring the total population now considered to more than 4.3 billion indi
in Appendix Figure A2.3 is similar to the previous one except that the “body of the elephant” is now shorter. This can be explained Brazil are three regions which recorded low growth rates over the period considered. Adding the population of the three regions also slightly shifts the “body of the elephant” to the left, since a large share of the population of the very poor nor very rich from a global point of
0% 50% 100% 150% 200% 250%
99.999
99.99
99.9 99 90 80 70 60 50 40 30 20 10
Real income growth per adult (%) Income group (percentile)
Squeezed bottom 90% in the US & Western Europe Rise of emerging countries Prosperity of the global 1% Bottom 50% captured 12%
Top 1% captured 27%
total income growth by percentile across all world regions, 1980–2016
Source: World Inequality Report 2018, Figure 2.1.4. See wir2018.wid.world for data sources and notes.
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10% 12% 14% 16% 18% 20% 22% 2015 2010 2005 2000 1995 1990 1985 1980
Share of national income (%)
Top 1% US Bottom 50% US
US Top 1% vs. Bottom 50% national income shares in the US and Western Europe, 1980–2016: 8% 10% 12% 14% 16% 18% 20% 22% 24% 2015 2010 2005 2000 1995 1990 1985 1980 Share of national income (%) Top 1% Western Europe Bottom 50% Western Europe Western Europe Top 1% vs. Bottom 50% national income shares in the US and Western Europe, 1980–2016:
Top 1% vs. bottom 50% in the US and Western Europe, 1980-2016
Source: World Inequality Report 2018, Figure 2.1.3. See wir2018.wid.world for data sources and notes.
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5% 10% 15% 20% 25% 2015 2010 2005 2000 1995 1990 1985 1980
Share of national income (%)
Top 1% Bottom 50%
China
This graph shows the evolution of top 1% and bottom 50% income shares in India and
world and which are discussed in the various methodological documents referred to in
5% 10% 15% 20% 25% 2015 2010 2005 2000 1995 1990 1985 1980
Share of national income (%)
Top 1% Bottom 50%
India
This graph shows the evolution of top 1% and bottom 50% income shares in India and
world and which are discussed in the various methodological documents referred to in
Source: World Inequality Report 2018, Appendix Figure A4. See wir2018.wid.world for data sources and notes.
Top 1% vs. bottom 50% in China vs. India, 1980-2016
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26
27
Source: World Inequality Report 2018, Figure 2.1.5. See wir2018.wid.world for data sources and notes.
earners captured 26% of total growth over the 50% captured 15% of total growth, more than the top 0.1%, which captured 12% of growth. The final step consists of including all remaining global regions—namely, Africa (close to 1 billion individuals), the rest of Asia these regions, we take into account between- growth is distributed in the same way as neighboring countries for which we have specifjc information (see allows us to distribute the totality of global income growth over the period considered to the global population. shape of the curve is again transformed ( ). Now, average global income growth rates America had relatively low growth over the period considered. This contributes to increasing global inequality as compared to the two cases presented above. The fjndings are the same as those presented in the right-hand column of : the top 1% income earners captured 27% of total growth over the 1980–2016 growth, about as much as the bottom 50%. cans, and Europeans in each global income
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 99.9 99.99 99.999 99 90 80 70 60 50 40 30 20 10 1
Population share within each global income group (%) Income group (percentile)
India Other Asia China Sub-Saharan Africa Latin America Russia Europe US-Canada Middle East
Geographic breakdown of global income groups in 1990
Global top 1%
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Source: World Inequality Report 2018, Figure 2.1.6. See wir2018.wid.world for data sources and notes.
groups and how has this evolved over time? tions by showing the geographical composi tion of each income group in 1990 and in geographic repartition of global incomes evolved only slightly, and our data allow for more precise geographic repartition in 1990, similar way to how Figures 2.1.2 through 2.1.4 decomposed the data, Figures 2.1.5 and 2.1.6 decompose the top 1% into 28 groups ). To be clear, all groups above richest 1% of the global population. within top global income groups. Indeed, the
ladder, US-Canada is the largest contributor to global top-income earners. Europe is largely represented in the upper half of the global distribution, but less so among the very top groups. The Middle East and Latin Amer among the very top global groups, as they within the top 1% global earners: in the next richest 1% group (percentile group p98p99), This indeed refmects the extreme level of inequality of these regions, as discussed in chapters 2.10 and 2.11. Interestingly, Russia into the very top groups. In 1990, the Soviet
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 99.9 99.99 99.999 99 90 80 70 60 50 40 30 20 10 1
Population share within each global income group (%) Income group (percentile)
India Other Asia China Sub-Saharan Africa Latin America Russia Europe US-Canada Middle East
Source: WID.world (2017). See wir2018.wid.world for data series and notes.
Geographic breakdown of global income groups in 2016
Global top 1%
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Source: World Inequality Report 2018, Figure 2.1.6. See wir2018.wid.world for data sources and notes.
groups and how has this evolved over time? tions by showing the geographical composi tion of each income group in 1990 and in geographic repartition of global incomes evolved only slightly, and our data allow for more precise geographic repartition in 1990, similar way to how Figures 2.1.2 through 2.1.4 decomposed the data, Figures 2.1.5 and 2.1.6 decompose the top 1% into 28 groups ). To be clear, all groups above richest 1% of the global population. within top global income groups. Indeed, the
ladder, US-Canada is the largest contributor to global top-income earners. Europe is largely represented in the upper half of the global distribution, but less so among the very top groups. The Middle East and Latin Amer among the very top global groups, as they within the top 1% global earners: in the next richest 1% group (percentile group p98p99), This indeed refmects the extreme level of inequality of these regions, as discussed in chapters 2.10 and 2.11. Interestingly, Russia into the very top groups. In 1990, the Soviet
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 99.9 99.99 99.999 99 90 80 70 60 50 40 30 20 10 1
Population share within each global income group (%) Income group (percentile)
India Other Asia China Sub-Saharan Africa Latin America Russia Europe US-Canada Middle East
Source: WID.world (2017). See wir2018.wid.world for data series and notes.
Geographic breakdown of global income groups in 2016
Global top 1%
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Source: World Inequality Report 2018, Figure 2.10.2 See wir2018.wid.world for data sources and notes.
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30% 35% 40% 45% 50% 2015 2010 2005 2000 1995 1990 1985 1980
Share of national income (%)
US Eastern + Western Europe Western Europe
top 10% national income share in europe and the us, 1980–2016
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36
Source: World Inequality Report 2018, Figure 2.10.4. See wir2018.wid.world for data sources and notes.
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▶
national income gives insight into the total
0% 100% 200% 300% 400% 500% 600% 700% 800% 2015 2010 2005 2000 1995 1990 1985 1980 1975 1970
Value of net public and private wealth (% of national income)
(or private capital) was 500% of national income. In 1970, net public wealth amounted to 36% of national income while the fjgure was 326% for net
Spain France Germany UK Japan US Private capital Public capital
the rise of private capital and the fall of public capital in rich countries, 1970–2016
Source: World Inequality Report 2018, Figure E6. See wir2018.wid.world for data sources and notes.
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which are fjrst evident in the evolution of income ratios. As examined in detail in chapter 3.2, the general rise of private wealth a combination of factors including the combi nation of growth slowdowns and relatively high saving rates and general rises in asset
can be viewed as an extreme case of this general evolution, but the liberalization and public asset privatization strategies chosen limited back in 1980, at slightly more than by 2015, private wealth reached approximately 500% of national income in China, roughly approaching the levels observed in countries . This gap would have been larger if estimates of offshore in estimates for Russia as it represents approx
50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 550% 600% 2012 2008 2004 2000 1996 1992 1988 1984 1980
Value of net private wealth (% of national income)
France China UK Russia US
net private wealth to net national income ratios in China, russia and rich countries, 1980–2015: the rise of private wealth
Source: World Inequality Report 2018, Figure 3.1.1. See wir2018.wid.world for data sources and notes.
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Source: World Inequality Report 2018, Figure E7. See wir2018.wid.world for data sources and notes.
held by governments. The sum of private and
▶ There has been a general rise in net private
1970 to 400–700% today. This was largely unaffected by the 2008 fjnancial crisis, or by
Figure E6
large increases in private wealth; following approaching levels observed in France, the
▶
wealth has even become negative in recent
). This arguably limits govern ment ability to regulate the economy, redis tribute income, and mitigate rising inequality. The only exceptions to the general decline in public property are oil-rich countries with large sovereign wealth funds, such as Norway.
0% 10% 20% 30% 40% 50% 60% 70% 2013 2008 2003 1998 1993 1988 1983 1978
Value of net public wealth (% of national wealth)
China Germany France Japan UK US
the decline of public capital, 1970–2016
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0% 10% 20% 30% 40% 50% 60% 70% 2013 2008 2003 1998 1993 1988 1983 1978
Share of net public wealth in net national wealth (%)
China UK Norway Germany France Japan US
the share of public wealth in national wealth in rich countries, 1978–2015
Source: World Inequality Report 2018, Figure 3.1.5. See wir2018.wid.world for data sources and notes.
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market, and by 2002, 85% of urban housing to quoted and unquoted housing assets through official markets. In contrast, Russians took a more gradual approach to cally given the right to purchase their housing to exercise this right immediately, while uncertainty surrounding the macroeconomic 1990s and even the 2000s to exercise this
tion process had a small dampening effect
excluding the top 10% fell in both countries across the period. Interestingly, the group’s to the aftereffects of hyperinfmation that wiped out savings. experienced in the former communist coun fell considerably from the high levels of the Gilded Age by the 1930s and 1940s, due to drastic policy changes that were part of the New Deal. The development of very progres sive income and estate taxation made it much more diffjcult to accumulate and pass
sharply limited the role of fjnance and the
0% 10% 20% 30% 40% 50% 60% 70% 2010 2000 1990 1980 1970 1960 1950 1940 1930 1920
Share of personal wealth (%)
UK China France Russia US
top 1% personal wealth share in emerging and rich countries, 1913–2015
Source: World Inequality Report 2018, Figure 4.2.1. See wir2018.wid.world for data sources and notes.
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At the global level (represented by China, substantially more concentrated than income: fjgure is up from 28% in 1980. The bottom 50% than 2%). Focusing on a somewhat larger group, we see that the bottom 75% saw its tion levels would probably be even higher if regions would be in the poorer parts of the
Figure 4.1.1
the growth rates
and 2017 (all growth rates are expressed in real terms—that is, after deduction of infma tion). A number of striking fjndings emerge. First, one can see that average wealth has grown faster since the 1980s than average income, refmecting the general tendency of Between 1987 and 2017, per-adult average Next, if we now look at the top of world wealth billionaire rankings—we fjnd that the top than average wealth holders: 5.3% since 1987 for the top 1/20 million, and 6.4% for the top 1/100 million (see ). By defjnition, forever: if top wealth holders were to grow on four times faster than average wealth in the
5% 10% 15% 20% 25% 30% 35% 40%
2015 2010 2005 2000 1995 1990 1985 1980
Share of global wealth (%)
Bottom 75% wealth share Top 1% wealth share
top 1% and bottom 75% shares of global wealth, 1980–2017: China, europe and the us
Source: World Inequality Report 2018, Figures 4.1.1. See wir2018.wid.world for data sources and notes.
1987-2017 Annual wealth growth
7.8% Annual wealth growth
2.8% Annual income growth
1.4%
WID.WORLD
THE SOURCE FOR GLOBAL INEQUALITY DATA
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▶
national income gives insight into the total
0% 100% 200% 300% 400% 500% 600% 700% 800% 2015 2010 2005 2000 1995 1990 1985 1980 1975 1970
Value of net public and private wealth (% of national income)
(or private capital) was 500% of national income. In 1970, net public wealth amounted to 36% of national income while the fjgure was 326% for net
Spain France Germany UK Japan US Private capital Public capital
the rise of private capital and the fall of public capital in rich countries, 1970–2016
Source: World Inequality Report 2018, Figure E6. See wir2018.wid.world for data sources and notes.
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Source: World Inequality Report 2018, Figure 4.5.1. See wir2018.wid.world for data sources and notes.
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Source: World Inequality Report 2018, Figure 4.5.2. See wir2018.wid.world for data sources and notes.
50
Source: World Inequality Report 2018, Figure 4.5.4. See wir2018.wid.world for data sources and notes.
51
Source: World Inequality Report 2018, Figure 4.5.3. See wir2018.wid.world for data sources and notes.
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different wealth groups own very different mostly deposits in 2012, while housing assets distribution, fjnancial assets—other than deposits—gradually become the dominant form of wealth, largely because of their large equity portfolios. These general patterns of constant throughout the 1970–2014 period, except that business assets played a more important role during the 1970s and early 1980s, particularly among middle-high- wealth shares going to the bottom 50%, categories, the impact of asset price move ments on inequality is signifjcant. In particular, , indicates the signifjcant impact general increase in housing prices on the wealth shares of the middle 40% during the Changes to house prices played a notable role in reducing wealth inequality in France consumer price infmation (2.4% faster per adults owning property was significant, growing at an annual rate of over 6% during
euros (accounting for infmation). For comparison, €1 = $1.1 = ¥7.3 at market exchange rates.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 99.9-100 99.5-99.9 99-99.5 95-99 90-95 80-90 70-80 60-70 50-60 40-50 30-40 20-30 10-20 0-10
Share of personal wealth portfolio (%) Wealth group (percentile)
€205 000 €115 000 €23 800 €2 530 €513 000 €16 169 000 €2 447 000
Financial assets (excl. deposits) Business assets Deposits Housing (net of debt)
Source: Garbinti, Goupille-Lebret and Piketty (2017). See wir2018.wid.world for data series and notes.
asset composition by wealth group in France, 2012
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Source: World Inequality Report 2018, Figure 4.5.7a. See wir2018.wid.world for data sources and notes.
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Source: World Inequality Report 2018, Figures 4.5.7b and 4.5.7c. See wir2018.wid.world for data sources and notes.
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Using data series from the Swiss National Bank, offshore wealth taxation forms and the 2012 tax amnesty, Martínez-Toledano is series for offshore assets. As illustrated by
Figure 4.5.8
increased rapidly during the eighties, nineties and at the beginning of the 2000s, before stabilizing after 2007, when Spanish tax authorities became stricter with tax avoid €150 billion in 2012, representing 8.6% of personal fjnancial wealth. Investment funds corrected by assigning the annual estimate of
Agency that states that the majority of foreign wealth tax base in 2007 and 2015, respec 1984 and 2013. Including offshore wealth in fact larger during the 2000s than in the eighties, contrary to what it is observed when ages approximately 24% from 2000–2013, notably larger than the 21% estimated when
ence is quite remarkable, particularly given that during this period of time the country experienced a housing boom and both nonfj nancial and fjnancial assets held in Spain grew
€0 €20 000 €40 000 €60 000 €80 000 €100 000 €120 000 €140 000 €160 000 €180 000 2015 2010 2005 2000 1995 1990 1985
Offshore wealth (constant 2016 € millions)
Notes: In 2015, unreported offshore wealth amounted to €147 billion. All values have been converted to 2016 constant euros (accounting for infmation). For Source: Martínez-Toledano (2017). See wir2018.wid.world for data series and notes.
In 2015, unreported
to €147 000 million, the equivalent of 8.6% of personal fjnancial wealth.
total unreported offshore assets in spain, 1984–2015
Source: World Inequality Report 2018, Figure 4.5.8. See wir2018.wid.world for data sources and notes.
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▶ Rising wealth inequality within countries
has helped to spur increases in global wealth and 2016.
▶
0.1% global wealth owners (in a world repre States) catch up with the share of the global
Figure E9 Share of global wealth (%)
(27%). The evolution of global wealth groups from 1987 to 2017 is represented by China, Europe and the US. Values are net of inflation.
0% 10% 20% 30% 40% 2050 2040 2030 2020 2010 2000 1990 1980 Top 1% Middle 40% “Global middle class” Top 0.1% Top 0.01% Assuming “business as usual”
Figure E9 The squeezed global wealth middle class, 1980–2050
Source: World Inequality Report 2018, Figures 4.1.3. See wir2018.wid.world for data sources and notes.
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13% of Chinese income growth up to 2050.
3% of total growth since 1980 in the United will capture 3% of growth over the 2017– 14% of total growth since 1980. income shares of the global top 1% and the global bottom 50% for the three scenarios. bottom 50% of the population slightly decreases from approximately 10% today to less than 9% in 2050. At the top of the global rises steeply in this scenario, despite strong growth in emerging countries. In Africa, for instance, we assume that average per-adult income grows at sustained 3% per year throughout the entire period (leading to a total growth of 173% between 2017 and These projections show that the progressive catching-up of low-income countries is not suffjcient to counter the continuation of worsening of within-country inequality. The results also suggest that the reduction (or stabilization) of global income inequality
Share of global income (%)
net of infmation.
… all countries follow US’s 1980–2016 inequality trend = scenario 2 … all countries follow their
trend = scenario 1 … all countries follow EU 1980–2016 inequality trend = scenario 3 scenario 3 scenario 1 scenario 2
0% 5% 10% 15% 20% 25% 30% 2010 2000 1990 1980 2050 2040 2030 2020 Global inequality assuming … Global Top 1% income share Global Bottom 50% income share
Global income share projections of the bottom 50% and top 1% , 1980–2050
Source: World Inequality Report 2018, Figures 5.1.1. See wir2018.wid.world for data sources and notes.
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for bottom groups? It is informative to focus different groups, and how they converge or diverge over time. But ultimately, it can be argued that what matters for individuals—and stress again here that our projections do not depicts the evolution of average global income levels and the average income
evolution of global average income does not straightforward to understand: in each of the a whole) experience the same total income and demographic growth. It is only the matter
tries that changes across scenarios. Let us possible that global average income would actually be slightly lower in the future than in the fjgures presented. In particular, the global bottom 50% average income would be even In 2016, the average per-adult annual income was €3 100, in contrast to the €16 000 global average—a ratio of 5.2 between the overall average and the bottom-half average. In 2050, global average income will be €35 500 according to our projections. In the business- as-usual scenario, the gap between average would have an income of €6 300. In the US
Annual income per adult (€)
living between countries. Values are net of infmation.
€0 €2 000 €4 000 €6 000 €8 000 €10 000 2050 2040 2030 2020 2010 2000 1990 1980
… all countries follow EU 1980–2016 inequality trend
Average income assuming …
… all countries follow US 1980-2016 inequality trend … all countries prolonge their own 1980–2016 inequality trend
Bottom 50% average income €3 100 €1 600 €9 100 €6 300 €4 500
Global average income projections of the bottom 50%, 1980–2050
Source: World Inequality Report 2018, Figures 5.1.3. See wir2018.wid.world for data sources and notes.
Annual income per adult (2016 €)
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Visit wir2018.wid.world for the online Version of the report.
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income tax rate from 40% to 50% in 2010 in part to curb top pay excesses. In the United and its famous “We are the 99%” slogan also refmected the view that the top 1% gained too much at the expense of the 99%. Whether this marked the beginning of a new tax policy tax rate was followed by slight reduction down to 45% in 2013. As we are writing these and congress are preparing a major tax over haul plan. The French government also proj ects to reduce tax rates on top incomes and Top inheritance tax rates were recently progressive reduction in top inheritance tax Germany, top inheritance tax rates have been wealth concentration through other means than tax policy. As with the question of income tax progressivity, it is impossible to know
to abolish the inheritance tax. in tax progressivity in rich countries, it is worth noting that major emerging economies still do not have any tax on inheritance, despite the extreme levels of inequality observed there. Inheritance is taxed at a particularly small rate in Brazil (at a national average of around 4%,
0% 10% 20% 30% 40% 50% 60% 70% Japan US Europe (FR+DE+UK) Brazil South Africa Russia India China
Source: WID.world (2017). See wir2018.wid.world for data series and notes.
Top marginal tax rate (%)
In 2017, the top marginal tax rate of inheritance tax (applying to the highest inheritances) was 55% in Japan, compared to 4% in Brazil. Europe is represented by France, Germany and the UK.
61% 4% 0% 0% 0% 0% 61% 38% 61% 40% 61% 55%
Figure 5.2.4 top inheritance tax rates in emerging and rich countries, 2017