Global Income Inequality Declining, Study Shows
Press Release - November 13, 2003
University Park, Pa.-- Global income inequality is on the decline, contrary to popularly accepted beliefs that the income gulf between nations is growing, says a researcher at Penn State.
"The main thing that is driving this is rapid income growth in China and southern Asia," says Dr. Glenn Firebaugh, professor of sociology and demography, and author of the book, The New Geography of Global Income Inequality, published recently by Harvard University Press. (view abstract)
"On average, incomes world wide are increasing at a little less than 2 percent a year, but China is increasing at about 6 percent," Firebaugh explains. "About 40 percent of the world's population lives in China or south Asia, and with such a substantial portion of the world's population moving up in income, this has been compressing income inequality worldwide.
"This represents a turnaround over historic trends," he adds. "Over the 19th century and the first half of the 20th, global income inequality exploded, but in the last 25 to 30 years it has been on the decline. This is a real sea change in global income inequality."
Firebaugh cites globalization as the key force driving the worldwide decline.
"Globalization has fueled this growth in Asia," he says. "It has paved the way for a great industrialization in Asia. The average person in Asia is much better off in terms of income than they were 30 years ago.
"I think if globalization just stopped one day, it would really hurt many of the poorer countries," Firebaugh adds. "Income growth worldwide would no doubt grind to a halt."
The Penn State researcher also notes that while income inequality is declining across nations, within-nation inequality continues to grow.
"Within many countries, such as the United States, income inequality has been increasing," Firebaugh adds. "Globalization probably does have a lot to do with that."
Although income inequality is declining globally, Firebaugh emphasizes that at the extremes, it is still growing.
'Sub-Saharan Africa is a region that is lagging badly behind," Firebaugh explains. "They are doing very poorly and globalization doesn't seem to be helping them. Income growth has actually been negative in Sub-Saharan Africa."
In producing this study, Firebaugh worked with the best available pricing and production data covering countries that account for 92 percent of the world's population.
--- **wh**
EDITORS: Dr. Firebaugh is at (814) 865-0172 or firebaugh@pop.psu.edu.
This press release courtesy of Penn State's Department of Public Information
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