World Income Distribution: Which Way?

Over the past few years, a large number of studies have aimed at estimating changes in relative income distribution across countries and globally. Some of the studies find the distribution to have worsened considerably, others that it has become more even. One objective of this article is to identify and quantify the reasons for these conflicting results. Another objective is to highlight the difference between changes in relative and absolute income distribution. While the relative distribution over the entire range of countries seems to have improved somewhat over the past 2-3 decades according to the most relevant indicators, the absolute income gaps between rich and poor countries have widened considerably. It is further demonstrated that these gaps will inevitably continue to grow for many decades to come.