An Analysis of International Income Inequality

Muhammad Idrees and Eatzaz Ahmad

Abstract

This study measures and decomposes world income inequality between world’s geographic regions during the past two decades using Theil’s two measures of inequality. The study finds that the extent of income inequality has been decreasing over the years mainly because of increasing per capita income in China and to some extent India. Income inequality has been 
highest, but declining sharply over time in East Asia & Pacific. Sub-Saharan Africa and Middle East & North Africa show moderate income inequalities, while other regions of the world show low inequality. The study finds that the 
contribution of income inequality between regions has been substantially larger than the contribution of inequality within regions.