Global Income Inequality 2022: How Big Is The Gap?

By Author: Karan Kumar
Total Articles: 16
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Helene D. Gayle has rightly said “The difference between rich and poor is becoming more extreme, and as income inequality widens the wealth gap in major nations, education, health and social mobility are all threatened.”
The unexpected crisis created by the Covid 19 disturbed the entire economy; the impact of the pandemic can still be seen. It shut down many sectors of the economy, which in turn affected the livelihood of many around the globe. The gaps between rich and poor is widening. Economic inequality is rising.

Economic Inequality refers to the unequal distribution of income and opportunity between different groups in society. A sharp rise in income inequality not only increases social and political concerns but economic ones as well.

A recent report published by The World Inequality Lab, a research center at the Paris School of Economics highlights the level of global economic inequality prevailing today. It presents comprehensive data on inequality at the global level.

Here are some notable points from the report:

THE COMPOSITION
To describe the extent of global ...
... inequality, the report focuses on the shares of income captured by different groups of individuals in the income distribution worldwide. It focuses on the income or wealth distribution across the global adult population of 5.1 billion individuals as of 2021.

The bottom 50% of the adult population, or the poorest half of the world population today consists of 2.5 billion individual adults. The middle 40% represents the population earning more than the bottom 50% and less than the top 10%. The top 10% is made up of 2 billion adults. The global 10% represents one-tenth of the world population i.e. 517 million adults. The global 1 percent are the richest 51 million individual adults.

Interpretation: In the year 2021, The global bottom 50% population captures 8.5% of total income measured at PPP (Purchasing Power Parity) and owns 2% of the wealth. The middle 40% owns 39.5% of total income and 22% of the wealth. The global top 10% owns 76% of household wealth and captures 52% of total income. The total income of top 1% global population stands at 19%. Their wealth is 38%.

GLOBAL INCOME DISTRIBUTION
In the year 2021, the global income amounts to $122 trillion, while global net wealth stands at six times this value, i.e. €510 trillion. The global average income per adult in 2021 is $23,380 or PPP $1,950 per month, while the average adult individual owns $139,000 in net wealth. These average values mask prominent inequalities between countries and their citizens.

If all the income are split equally worldwide, i.e. if everybody earned $23,380 per year, then the global bottom 50% of individual adults would have captured 50% of the global income. Likewise, the global top 10% would have captured 10% of the total income.

Today, the global bottom 50% captures a very small portion of the global income i.e. only 8%. What does this mean? This means that, on average, the bottom 50% earns slightly less than one-fifth of the global average, i.e. €230 per month or €2,800 per year.
The global middle 40% earns 39% of the total. Its income is €1,375 per month (€16,500 per year).
The global top 10% earns 52% of the total. Its average income lies at €7,300 per month(€87,200 per year).