Sunday, October 3, 2010

Data and Trends in Income Inequality by Country

Much has been said about the growth of income inequality in the U.S., but where exactly do we stand in comparison to other countries? Country data can be found in The World Fact Book published by the CIA. More U.S. data and a discussion of the Gini number can be found here. The Gini number is a statistical construct aimed at measuring the dispersion in a distribution. It varies between zero for a perfectly uniform distribution and one for perfectly non-uniform distribution (one family has all the income, presumably).

Data for the various countries is not always available at the same point in time and various agencies can come up with slightly different number, but some conclusions can be obviously and clearly drawn.

Let us compare Gini numbers for several counties with the latest data available.

U.S.            45.0   2007

U.K.           34.0   2005

France        32.7   2008

Germany    27.0   2006

Finland       29.5   2007

Denmark    29.0   2007

Canada      32.1   2005

Norway     25.0   2008

Sweden     23.0   2005

Australia    30.5   2006

Bolivia       59.2   2006

Brazil        56.7   2005

Mexico     48.2   2008

Namibia    70.7   2003

Paraguay   53.2   2009

Singapore  48.1   2008

The obvious conclusion is that inequality in the U.S. is exceeded mainly in Africa and Latin America. The developed countries of Europe have a much fairer income distribution than the U.S.

The next question is “what is the long term trend?”

U.S.        +4.2 in ten years

U.K.       -2.8 in seven years

France     constant over thirteen years

Germany  -3.0 in twelve years

Brazil      -4.0 in seven years

Mexico   -4.9 in ten years

We are one of the few countries in the world with a long term trend toward greater inequality. Ten years is a long time. Could more recent U.S. data tell a different story?

2006    47.0 highest number ever calculated

2007    46.3

2008    46.69

2009    46.8

These numbers are from a different source so they are not exactly the same as the previous tabulation. It would appear that matters are getting worse as the economy begins to recover.

Recall Galbraith’s warning that rising inequality leads to increased unemployment.

One could conclude from these numbers that the U.S. aspires to become a banana republic.


  1. A natural endpoint of unchecked capitalism is a few very rich and masses of very poor. many "banana republics" seem to fall into this failure. In spite of my worries about government regulation, one of the functions of government is to check this failure mode of capitalism - that is, preserve a middle class. I am not sure that we have done that very well in the last three decades....

  2. Any effort to lower the inequality rating of the US is branded, by its opponents, as socialism. In support of that they mention that (per your listing above) four of the five countries with the world's lowest inequality are the four Scandinavian countries (Denmark, Finland, Norway, and Sweden).
    What is not mentioned is that these countries are the wealthiest in Europe. I.e., their brand of socialism, if it can even be called that, creates the highest gross national product per person, and..............for some of them, even higher than the US.


Lets Talk Books And Politics - Blogged