Decomposing World Income distribution : DoesThe World Have A Middle Class?

TLDR: In this article, the authors used Yitzhaki's Gini decomposition to decompose total income inequality between individuals in the world, by continents and regions, and found that Asia is the most heterogeneous continent; between-country inequality there is more important than inequality in incomes within-countries.

Abstract: Using the national income/expenditure distribution data from 119 countries, the paper decomposes total income inequality between the individuals in the world, by continents and regions. We use Yitzhaki's Gini decomposition which allows for an exact breakdown (without a residual term) of the overall Gini by recipients. We find that Asia is by far the most heterogeneous continent; between-country inequality there is more important than inequality in incomes within-countries. Africa, Latin America, and Western Europe/North America are quite homogeneous continents with small differences between the countries (so that most of their inequality is explained by within-country inequality). If we divide the world into three groups: the rich G7 (and its equivalents), the less developed countries (all those with income per capita less than, or equal to, Brazil's), and the middle-income countries (all those with income level between Brazil and Italy), we find that there is very little overlap between such groupings, i.e. very few people from the LDCs have incomes which are in the range of the rich countries.