(15 December 2017) – The World Inequality Report 2018, published yesterday by French economist Thomas Piketty and his team, shows that income inequality has increased in nearly all world regions in recent decades, but at different speeds.
The fact that inequality levels are so different among countries, even when countries share similar levels of development, highlights the important roles that national policies and institutions play in shaping inequality.
Income inequality varies greatly across world regions. It is lowest in Europe and highest in the Middle East.
Economic inequality is largely driven by the unequal ownership of capital, which can be either privately or public owned. Since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging.
While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries. This limits the ability of governments to tackle inequality, and has important implications for wealth inequality among individuals.
Tackling global income and wealth inequality requires important shifts in national and global tax policies. Educational policies, corporate governance, and wage-setting policies need to be reassessed in many countries. Data transparency is also key.
According to the report, if in the coming decades all countries follow the moderate inequality trajectory of Europe over the past decades, global income inequality can be reduced—in which case there can also be substantial progress in eradicating global poverty.