Shivali Best — Daily Mail Dec 14, 2017
A report has revealed that over the last 35 years, the global top 0.1 percent of earners increased their wealth by as much as the poorest half.
The World Inequality Report details the widening gap between the very rich and poor.
The researchers suggest that EU-style policies are the best-suited to reduce global inequality and poverty, according to the researchers.
The World Inequality Report draws on the work of over 100 researchers from more than 70 countries.
The report, drafted by a team including star French economist Thomas Piketty, used a massive database combining economic statistics and survey data from around the world.
They found that fast growth in developing countries such as China and India meant that the poorest half of the world population still saw their income grow significantly in recent decades.
The middle class meanwhile got squeezed.
‘In recent decades, income inequality has increased in nearly all countries, but at different speeds, suggesting that institutions and policies matter in shaping inequality,’ said the researchers.
They found market liberalisation and privatisations led to increases in inequality in Russia, China and India, but at different rates reflecting the speed at which they opened up their economies.
Meanwhile, they found ‘the divergence in inequality levels has been particularly extreme between Western Europe and the United States, which had similar levels of inequality in 1980 but today are in radically different situations.’
The top one percent of earners captured nearly 10 percent of the income in both areas in 1980.
In 2016 it had climbed to 12 percent in Western Europe but had more than doubled to 20 percent in the United States.
The researchers said: ‘The top 0.1 percent income group (about 7 million people) captured as much of the world’s growth since 1980 as the bottom half of the adult population.’
The researchers said the spike in inequality in the United States was due to ‘massive educational inequalities’ and a tax system having become less progressive.
In Western Europe, there was less decline in the progressivity of taxes, and wage-setting and educational policies were more favourable to lower and middle-income groups.
The team also looked to the future under various policy scenarios.
If the world follows US-style policies the top one percent of earners will see their share of global income climb from just over 20 percent to 28 percent by 2050.
On the other hand, the bottom 50 percent would see their share slide from just under a tenth of global income to closer to seven percent.