The Shape of Global Inequality

Most sociological discussion of inequality within a country — income ratios, Gini coefficients, top-decile shares — takes the national population as the unit of analysis. A different, and arguably more consequential, question is: what does inequality look like when we take the entire human population as the unit of analysis? This is the question of global inequality, and the answer has a specific structure that national frames systematically obscure.

The foundational analytical move here is due to Branko Milanović, an economist working in the sociological tradition of Kuznets and Atkinson, whose trilogy of books — Worlds Apart (2005), The Haves and the Have-Nots (2011), and Global Inequality (2016) — reorganized the field. Milanović's decomposition is straightforward in principle. Total global inequality can be partitioned into two components: between-country inequality, the dispersion of average incomes across countries; and within-country inequality, the dispersion of incomes around the national mean within each country (Milanović 2016, pp. 10-18). The two components move independently, and their relative weight has changed dramatically over the past two centuries.

The historical pattern is what Kenneth Pomeranz called the Great Divergence (Pomeranz 2000). Around 1800, the ratio of average income in the richest part of the world to the poorest was perhaps 2:1 or 3:1. By 2000, the same ratio — say, the United States to sub-Saharan Africa — was on the order of 20:1 or higher in purchasing-power terms (Bourguignon 2015, pp. 45-52). During this two-century span, between-country inequality exploded while within-country inequality in the industrializing world first rose, then fell (the mid-twentieth-century compression), then rose again. By the late twentieth century, between-country inequality was the dominant component of global inequality: most of the reason a randomly chosen person was rich or poor was the country they happened to be born in, not their position within that country's distribution.

Recent decades have partially reversed this pattern. The Great Convergence, beginning in the 1980s and accelerating in the 2000s, saw substantial growth in China, India, and other populous emerging economies, which compressed between-country inequality at the global level. China alone contributed the bulk of the effect: its GDP per capita, around 2% of the US level in 1980, reached roughly 30% of the US level by 2020 in PPP terms (World Bank 2022, pp. 8-14). Meanwhile, within-country inequality rose in many advanced economies after 1980 — sharply in the United States and United Kingdom, more modestly in continental Europe (Piketty 2020, pp. 21-35).

The combined effect on global inequality since the late 1980s has been a slight reduction in the overall global Gini coefficient — from roughly 0.70 in 1988 to around 0.62 by the late 2010s by most measures (Chancel and Piketty 2021, pp. 17-24). This is still a very high level of inequality by any national comparison; the most unequal countries in the world have Ginis around 0.60. The human species is more unequally distributed in income than the population of any individual country.

The analytical upshot is important. Global inequality is not simply a scaled-up version of national inequality. Its dominant component — between-country variance — is generated by mechanisms that do not operate within countries: differential state capacity, colonial legacies, technology gaps, the global trade and financial system, geographic and institutional factors that shape long-run growth trajectories. Sociological analysis of global inequality therefore requires tools distinct from those used to analyze national inequality, including comparative historical analysis, world-systems theory, and institutional economics. The remainder of this topic surveys those tools and the empirical patterns they address.