Extreme poverty is decreasing, while extreme inequality is on the rise — two trends with far-reaching consequences all over the globe.
The bottom line: The millions of people escaping poverty may find they don't have far to rise.
Poverty receding...
- 20 years ago, two-thirds of the world lived on less than $5.50 a day, according to the World Bank. Less than half does now. Equally dramatic is the reduction in extreme poverty (less than $1.90/day), from 30% of the world in 1996 to 11% as of 2013.
- China’s transformation is more remarkable still. If the poverty rate had remained unchanged from 1990 to today, rather than decreasing from 98% to 31%, 900 million more Chinese would live in poverty than currently do.
- Children being born on every continent and in nearly every country on earth are significantly less likely to grow up in poverty than their parents were.
Income inequality rising...
- The 7 million richest people in the world (the top 0.1%) have taken home 13.8% of all economic growth since 1980, according to the 2018 World Inequality Report from the Paris School of Economics. That's as much as the poorest half of the world, or 3.8 billion people.
- Europe is the least unequal part of the world, but the top 10% of earners still capture 37% of total income. In the Middle East — the most unequal region — 10% of earners take home 61% of total income.
- "If established trends in wealth inequality were to continue, the top 0.1% alone will own more wealth than the global middle class by 2050," per the report.
Social mobility falling...The Organization for Economic Co-operation and Development (OECD) notes that “as income inequality has increased since the 1990s, social mobility has stalled, meaning that fewer people at the bottom have moved up while the richest have largely kept their fortunes.”
A recent OECD report examines how much of that wealth carries over to the next generation — it ranges from 20% in Denmark to 70% in Colombia — and calculates how long it would take someone born in the bottom 10% to reach the mean income in their country.
- 3 or fewer generations: Denmark (2), Finland (3), Norway (3), Sweden (3).
- 4 generations: Australia, Belgium, Canada, Spain, Greece, Japan, New Zealand, Netherlands.
- 5 generations: United States, Ireland, South Korea, Portugal, U.K., Italy, Austria, Switzerland.
- 6 generations: France, Chile, Germany, Argentina.
- 7 or more generations: China (7), India (7), Hungary (7), Brazil (9), South Africa (9), Colombia (11).