Laurence Roope

GLOBAL INEQUALITY: RELATIVELY LOWER, ABSOLUTELY HIGHER

This paper measures trends in global interpersonal inequality during 1975–2010 using data from the most recent version of the World Income Inequality Database (WIID). The picture that emerges using ‘absolute,’ and even ‘centrist’ measures of inequality, is very different from the results obtained using standard ‘relative’ inequality measures such as the Gini coefficient or Coefficient of Variation. Relative global inequality has declined substantially over the decades. In contrast, ‘absolute’ inequality, as captured by the Standard Deviation and Absolute Gini, has increased considerably and unabated. Like these ‘absolute’ measures, our ‘centrist’ inequality indicators, the Krtscha measure and an intermediate Gini, also register a pronounced increase in global inequality, albeit, in the case of the latter, with a decline during 2005 to 2010. A critical question posed by our findings is whether increased levels of inequality according to absolute and centrist measures are inevitable at todays per capita income levels. Our analysis suggests that it is not possible for absolute inequality to return to 1975 levels without further convergence in mean incomes among countries. Inequality, as captured by centrist measures such as the Krtscha, could return to 1975 levels, at todays domestic and global per capita income levels, but this would require quite dramatic structural reforms to reduce domestic inequality levels in most countries.

Global Interpersonal Inequality: Trends and Measurement

This paper discusses different approaches to the measurement of global interpersonal in equality. Trends in global interpersonal inequality during 1975-2005 are measured using data from UNU-WIDER’s World Income Inequality Database. In order to better understand the trends, global interpersonal inequality is decomposed into within-country and between-country inequality. The paper illustrates that the relationship between global interpersonal inequality and these constituent components is a complex one. In particular, we demonstrate that the changes in Chinas and Indias income distributions over the past 30 years have simultaneously caused inequality to rise domestically in those countries, while tending to reduce global inter-personal inequality. In light of these findings, we reflect on the meaning and policy relevance of global vis-a- vis domestic inequality measures.

The development and happiness of very young children

The paper demonstrates how Sen’s (Commodities and capabilities. Amsterdam, North-Holland, 1985) alternative approach to welfare economics can be used to shed light on the wellbeing of very young children. More specifically, we estimate versions of the three key relations from his framework using data from the German Socio-Economic Panel (SOEP) Survey. Our primary models provide evidence that skills are related to involvement in cognate activities with a parent, indicating a behavioural relationship between capabilities and activities which is not explicit in Sen’s original set-up, but is key to the development and happiness of young children. A second set of models indicates that the daily activities of very young children are related to household income but that in some cases the association with parenting inputs is stronger. Thirdly, we report happiness regressions for the children which seem to suggest that shopping and reading are valued but that their distribution is limited in some cases—probably either by household income or parental education. Across the piece, we find that the number of siblings is negatively related to activity involvement with parents, as hypothesised by Becker, but positively related to everyday, motor and social skills. Combined with evidence from other studies, we conclude that the capability approach provides a useful framework for understanding the economics of wellbeing across the entire life course.