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Summary: Inequality among World Citizens: 1820-1992 by Franois Bourguignon

and Christian Morrisson

Miguel Santana, 150214012

1. Introduction

This essay consists in a summary of Franois Bourguignon and Christian Morrissons


paper Inequality among World Citizens: 1820-19921. In this piece of research, the authors
analyse the topic through a new lens, that of world instead of international inequality.
This amounts to considering the individuals differences in the construction of the distribution,
as opposed to building it with an underlying rich versus poor countries dialectic.
Additionally, income is here not the sole concern: sources of inequality, as well as other
(potentially more accurate) measures of welfare are analysed.
I will proceed roughly in the same order as the authors. In the first section, both the
authors main findings on income inequality and their relation to the evolution of poverty
throughout the 19th and 20th centuries are described. Section 2 discusses what were the
dominant forces in the developments of income inequality, as well as the evolution of country
and citizen mobility. Section 3 briefly assesses life expectancy inequality and how that
influenced the distribution of lifetime income. Section 4 concludes. Throughout the essay, all
quotations refer to Bourguignon and Morrissons paper.

2. Income Inequality and Poverty

To construct the Lorenz curve and consequent income distribution for the world, the
authors have gathered information on real GDP per capita at constant purchasing power parity
dollars and population for each country. They then combined these data with nine deciles and
two top vintile shares for the period 1820-1992. Bourguignon and Morrisson found that world
inequality has dramatically increased during this period. After a continuous evolution from
1820 to 1950 (with a pause between 1910 and 1929, as would be expected), the income
distribution improved in the following decade, only to worsen afterwards, albeit in a much


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F. Bourguignon, C. Morrisson: Inequality among World Citizens: 1820-1992, The American Economic
Review, Vol. 92, No. 4 (Sep., 2002), pp. 727-744
more stable fashion. This is because a lower bound to the four bottom world deciles finally
appeared between 1980 and 1992 (even though no analogous upper bound for the top decile
existed). Overall, the trend is translated into a Gini coefficient of 50% in 1820, compared to
65.7% in 1992.
Nonetheless, the dramatic increase in inequality was not accompanied by a worsening
in poverty rates nor in the mean income of any quantile: the latter increased by factors of 3 to
almost 10 (depending on the countries), while the former fell from 84% to 24%.
Notwithstanding these conclusions, it must be stated that the absolute number of poor
people did increase throughout the period and, moreover, that such needed not be the case, had
the world distribution of income remained unchanged.

3. Drivers of Inequality and Mobility

To assess what drove inequality during this period, the authors have created
counterfactual scenarios in which economic growth, population growth, and country income
distribution are kept constant. Broadly speaking, differences in country economic growth rates
practically explain all of the increase in world inequality and in the number of poor people.
Within-country inequality was very important at the beginning of the period, but became
decreasingly so afterwards. Nevertheless, if within-country inequality is not considered, global
inequality becomes grossly underestimated; this provides a good argument for taking the
world, and not the international, approach mentioned at the introduction.
Specifically speaking about the effects of economic growth, the authors summarize
findings as follows:

On the disequalizing side, the main forces were the consistently better economic
performance of European countries and their offshoots, the relatively poor growth
performances of China and India until late in the 20th century, the divergence between
Anglo-Saxon and the other European countries in the first half of the 19th century, and the
slow growth of Africa in the second half of the 20th century. On the equalizing side, the
main forces were the equalizing of incomes within Western European countries, Russia,
and Eastern Europe in the interwar period and after World War II; the European countries
quick catch-up to the United States after World War II; and Chinas outstanding growth
performance in the last decade or two of the period. While the rapid growth of the Asian
dragons was another important phenomenon in this period, the effect on world income
distribution was ambiguous and limited. (p. 738)

As for country mobility the analysis of the question What share of the top centile of
the world belongs to country X at time t? it is worthy of notice that, at the upper part of the
distribution, Europe had a consistently increasing share of the top decile from 1820 to 1950,
an evolution brought to a halt only by a surge in economic growth by the Asian dragons and
by the relative decline in the European population. At the lower part of the distribution, even
though Asia is always strongly dominant, it must be emphasised that Africa has had a
continuously increasing share among the worlds poor.
Finally, the analysis of citizen mobility What share of the population of country X
is in the top world decile, or any other quantile, of the world distribution at time t? shows a
low average immobility ratio of roughly 30%. Furthermore, this movement has led to a
polarized distribution of world income in the periods of 1950-1992 and 1820-1870, and was
not stable; as the authors point out, the transition matrices are not Markovian, in the sense that
if a variable were to follow the empirical transition probabilities, it would not be able to circle
between periods.

4. Life expectancy and lifetime income

Bourguignon and Morrisson found that the average life expectancy in the world has
risen from 26 years in 1820 to 60 years in 1992. However, this progress was characterized by
high inequality and slow speed until 1929, and the reverse afterwards. Note that this stands in
strong opposition to the evolution of income inequality, for even though it has decelerated since
1950, it was never reversed. Therefore, as would be expected, lifetime income inequality also
differs from that of income alone:

The initial divergence is reinforced since the increasing disparities in life expectancy
combines with the deceleration of income divergence to reduce a convergence of world
lifetime income. However, the convergence of life expectancy seems to have stopped or
slowed considerably during the last two decades of the period so that the evolution of world
inequality of lifetime income parallels that of income. (p. 742)
5. Conclusion

This paper provides new insight into the evolution of world inequality throughout the
19 and 20th centuries. On one hand, it shows that not only it has increased, but that this
th

worsening was mainly due to differences in economic growth across countries. Furthermore,
the stability of this distribution is disputable, both by the evidence provided by mobility
analysis and due to the increasing concentration of world poverty in some regions. On the other
(brighter) hand, life expectancy somewhat placates this trend, since its convergence has
mitigated the inequality of lifetime income and, additionally, both the increase in the mean
income of all quantiles and the decrease in the shares of poverty are quite enthusiastic. This
piece of evidence suggests that the existence of inequality is neither sufficient nor necessary
for welfare to diminish historically, the livings standards of the world population seem to
have increased, notwithstanding the dramatic increase in inequality.