Decomposing World Income Distribution: Does The World Have A Middle Class?

By Branko Milanovic, Shlomo Yitzhaki. 2001

321 citations recorded by the source corpus.

Using national income and expenditure distribution data from 119 countries, the authors decompose total income inequality between the individuals in the world, by continent and by"region"(countries grouped by income level). They use a Gini decomposition that allows for an exact breakdown (without a residual term) of the overall Gini by recipients. Looking first at income inequality in income between countries is more important than inequality within countries. Africa, Latin America, and Western Europe and North America are quite homogeneous continent, with small differences between countries (so that most of the inequality on these continents is explained by inequality within countries). Next the authors divide the world into three groups: the rich G7 countries (and those with similar income levels), the less developed countries (those with per capita income less than or equal to Brazil's), and the middle-income countries (those with per capita income between Brazil's and Italy's). They find little overlap between such groups - very few people in developing countries have incomes in the range of those in the rich countries.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/d047feb90be9246e7b2acb68fd000b8659c55ff0

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Citations in the corpus

Innovation, Poverty and Inequality: Cause, Coincidence, or Co-evolution? (2009, background): “This distribution is highly unequal; the differences are so steep that there is essentially “no world middle class,” according to his analysis (Milanovic 2002).”
Gini’s Mean difference: a superior measure of variability for non-normal distributions (2003, background): “The ratio of the between-group component to its maximum value (under perfect stratification) can serve as an index of the robustness of the grouping (Milanovic and Yitzhaki, 2002).”
The Developing World's Bulging (but Vulnerable) 'Middle Class' (2009, unknown): “Milanovic and Yitzhaki (2002) defined the middle class as those living between the mean incomes of Brazil and Italy,6 while Banerjee and Duflo (2008) identified the “middle class” in developing countries as those living between $2 and $10 a day.”
On the identification of the middle class (2011, background): “The relationship between class and income distribution goes back to the origins of economic discipline, at least to the famous opening of Ricardo‟s Principles of Political Economy and Taxation (1821) that the principal problem in political economy is to determine the laws which regulate the…”