The Inequality Gap: The Bottom 40 May Be Further Away Than We Thought

This paper explores new data on income inequality by the World Inequality Database, which corrects underreporting of income in the top deciles of the income distribution. We find that within all low- and middle-income countries, the bottom 40 income shares are much lower than we previously thought, while the top 10 income shares are much higher. Important for Sustainable Development Goal 10.1, the bottom 40 income shares have been growing at a much slower pace than estimated earlier and often at a lower rate than the top 10 shares. Demonstrating the value of improved datasets, this paper calls upon practitioners to have these enhanced data and metrics in their methodological toolbox.