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*7.2 Social Economics and Public Policy – Marcelo Neri

*7.2 How about Pure Inequality?:

Ginis and Lorenz - World and Brazil
Marcelo Neri
FGV Social

Gini Index and Lorenz Curve

Graph from the Lorenz Curve L(P)

Alternative Formula
𝑁
𝑁+1 2
𝛾= − 𝜌𝑖 𝑥𝑖
𝑁 − 1 𝑁 (𝑁 − 1)𝜇
𝑖=1

1
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Lorenz curves 1988 and 2011 - Global

There is not Lorenz dominance of 2011 wrt 1988
100

90

80

70

60

50

40
2011
30

20

10

0
0 10 20 30 40 50 60 70 80 90 100

Source: Milanovic
1988 2011 perfect equality
3

Lorenz curves 2008 and 2011 - Global

There is Lorenz dominance of 2011 wrt 2008
100

90

80

70

60

50

40
2011
30

20

10

0
0 10 20 30 40 50 60 70 80 90 100

2008 2011 perfect equality

Source: Milanovic 4

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Generalized Lorenz curves 1988 and

2008 - Global
There is generalized Lorenz dominance of 2008 wrt 1988
4500

4000

3500
Average cumulative per capita income

3000

Generalized Lorenz Curve L(μ,P) = μ L(P)

2500

2000

1500

1000 2008
1988
500

0
0 10 20 30 40 50 60 70 80 90 100
Cumulative percentage of people
Source: Milanovic 5

Global Gini 1820-2011

75

L-M and M series

70

65

60 B-M series

55

50

45

40

35

30
1800 1850 1900 1950 2000 2050

Branko Milanovic

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Evolution of World Income Inequality

Different Concepts
China Effect ChIndia Effect
.75

Overall Inequality
.65
Gini Coefficient

Inequality Across Nations – Weighted by Population

.55

Inequality Across Nations - Unweighted

.45

1950 1960 1970 1980 1990 2000 2010

year

Source: Milanovic (2011)

Brazilian Per capita GDP PPP has

Brazil is a small World grown 3.5% agains 3.6% of the
world between 2002 e 2012
.75
China Effect ChIndia Effect

Inequality Across Nations

.65
Gini Coefficient

0.607
0.589 0.594
0.581
.55
0.539
0.535

0.5144

Was Falling in Brazil

.45 but still the 12th highest
1950 1960 1970 1980 1990 2000 in 159 countries
2001 2013
Year
Source: Milanovic (2011) and Neri (2011)

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Kuznets relationship for the United States, 1774-2013

60

1860 1933

50

1929
1774 2013
Gini of disposable per capita income

40

194
1979
30

20

10

0
1000 10000 100000
GDP per capita (in 1990 international dollars; Maddison)

Urban Gini in China: 1981-2014 (based on official household

surveys)
0,35

0,3

0,25
Urban Gini

0,2

0,15

0,1

0,05

Year
Branko Milanovic

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Where are now China and the US?

Gini First Kuznets wave Second Kuznets wave

China 2013
United States
2013

GDP per capita

Long Run & Regional Perspective Latin America Latina last 3 Decades

Inequality of Per Capita Income (Gini)

62
0.607

6 0.592
0.589
0.581
0,58
Cornia (2014) on CEDLAS & CEPAL
Inequality (Gini)

0,56 0.560
Kuznets curves or
0.543 Kuznets Waves?
0,54 0.535 Milanovic (2016)
0.523
0,52

0,5

0,48
1960 1970 1979 1990 2001 2007 2009 2013
Year
Source: CPS;FGV from PNAD, PME and Census / IBGE microdata and Langoni (1973)

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BRAZIL GINI HOUSEHOLD PER CAPITA INCOME – ALL SOURCES

0,6472
0,66 0,6346

0,64

0,6152

0,6065
0,62

0,5996
0,5945

0,5928
0,60

0,58

0,5451
0,56

0,5350
0,5249
0,5242
0,54

0,52

0,50
1987

2002

2017
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986

1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001

2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

2018
Source FGV Social from PNAD and PNADC/IBGE microdata – Harmonized PNAD 2004-2015 guided

The Kuznets relationship for Brazil, 1839-2013

70

1991
1972
60

50

2013

40
1930
Gini

30

20
1885

10

0
0 1000 2000 3000 4000 5000 6000 7000 8000
GDP per capita (in 1990 international dollars)
Branko Milanovic

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Inequality by Municipalities Gini Index of Per Capita Income

by Municipality - 2000

2000

Source: Demographic Census/IBGE microdata

Inequality by Municipalities Gini Index of Per Capita Income

by Municipality - 2000
Inequality fell in
83% of Latin
America countries
and 40% of World
Countries

Inequality fell in 80% 2010

of the 5500 Brazilian
Municipalities

Source: Demographic Census/IBGE microdata

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Inequality in Latin America