Abstract

Depending on whether income inequality is assessed across or within countries, the picture that emerges can be starkly different. If inequality is examined at the global level, that is, abstracting from national boundaries, inequality has declined substantially over the past three decades. This decline reflects income convergence between developing and advanced economies aided by globalization and technological advancement. Income inequality within national boundaries, however, presents a mixed picture: some countries have experienced a reduction in inequality while others, particularly advanced economies, have seen a significant uptick in inequality. Although increased global integration and technological progress are widely recognized as having generated widespread economic growth and falling global inequality and poverty, the rising inequality in advanced economies, in conjunction with job insecurity and stagnating real incomes for a segment of the population, has led to growing public backlash against globalization.