Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2017:7: Global earnings inequality, 1970–2015

Olle Hammar () and Daniel Waldenström ()
Additional contact information
Olle Hammar: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Daniel Waldenström: Research Institute of Industrial Economics, Postal: Research Institute of Industrial Economics and Paris School of Economics, CEPR, IZA, UCFS and UCLS

Abstract: We estimate trends in global earnings dispersion across occupational groups using a new database covering 66 developed and developing countries between 1970 and 2015. Our main finding is that global earnings inequality has declined, primarily during the 2000s, when the global Gini coefficient dropped nearly 10 points and the earnings share of the world’s poorest half doubled. Decomposition analyses emphasize the role of income convergence between poor and rich countries and that earnings have become more similar within occupations in traded industries. Sensitivity checks show that the results are robust to varying real exchange rates, inequality measures and population definitions.

Keywords: Global inequality; Development; Inequality decomposition; Labor markets

JEL-codes: D31; F01; O15

67 pages, May 2, 2017

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