1. The World Income Distribution of Income: Falling Poverty and…Convergence, Period Sala-i-Martin (2006)

2. Convergence literature Beta divergence: poor countries grow slower than rich countries Sigma divergence: dispersion of income per capita across countries grew over time

3. Changing unit of observation Idea: change unit of observation from country to individuals Results: beta and sigma convergence

4. Weighing by population Few Asian countries that converged to OECD are large Many diverging countries (Africa) are small Total population of Africa =1/2 population of China or India

5. Population Weights: Limits Assumes all individuals within a country have the same income Ex: income per capita in a country just above poverty line…no poors? Conclusion: use within country information…problematic (data)

6. Methodology Center mean at GDP/capita (National Statistics) Combine it with quintile income shares for every country and year 5B: trend of neighbors 329M: share of neighbors 5B: linear trend Excluded Then smooth the densities with a kernel

7. Growth Increased inequality Falling poverty Growth Population growth Falling poverty

8. No poors Growth Reduction in inequality Falling poverty

9. Sharp increase in inequality Little reduction on poverty Lost decade: 1980-1990 (left shift), increase in poverty Different scale: 10-100 000 Zero or negative growth Explosion in inequality Average worse off, richest better off Increase in poverty

10. Growth until 1990 Increased inequality in 1990 Negative growth and increased inequality 1990-2000: small increase in poverty (rich enough in 1990)

11. World Income Distribution Shift to the right (higher gdp/capita) No clear evolution of inequality China: growth + increase in inequality In 2000: top 1/5 th of chinese distribution around 10 000 (Mexico, Poland, Russia) Niger fills gap (China, India, Indonesia)

12. Gdp/capita for majority of world increases Fall in poverty

13. Poverty rates: falling Monetary amount or caloric intake Consumption or income Position Baseline year

14. Africa: 14.5% of world poor in 1970, 74.5% today

15. Inequality Sound logic (population weights)?

16. Equality: convergence

17. Decomposition: Across and Within 1970: 71% across, 29% within Within increasing over time Across decreasing over time 2000: 61% across, 39% within Decline in across larger than increase in within: fall in income inequality