PARAMETRIC ESTIMATIONS OF THE WORLD DISTRIBUTION OF INCOME

January 26, 2010

World poverty is falling.  Between 1970 and 2006, the global poverty rate has been cut by nearly three quarters.  The percentage of the world population living on less than $1 a day (in PPP-adjusted 2000 dollars) went from 26.8 percent in 1970 to 5.4 percent in 2006, say economists Maxim Pinkovskiy and Xavier Sala-i-Martin. 

For example: 

  • Although world population has increased by about 80 percent over this time (World Bank 2009), the number of people below the $1 a day poverty line has shrunk by nearly 64 percent, from 967 million in 1970 to 350 million in 2006.
  • In the past 36 years, there has never been a moment with more than 1 billion people in poverty, and barring a catastrophe, there will never be such a moment in the future history of the world. 

Pinkovskiy and Sala-i-Martin find that in the last 40 years, world poverty rates and counts have collapsed.  Their results also show that while the reduction in poverty has been most dramatic in East Asia, the result that global poverty rates decline is not driven by East Asia.  

Between 1970 and 2006: 

  • The South Asian poverty rate fell by 86 percent.
  • The Latin American poverty rate fell by 73 percent.
  • The Middle Eastern poverty rate fell by 39 percent.
  • The African poverty rate fell by more than 20 percent. 

Source: Maxim Pinkovskiy and Xavier Sala-i-Martin, "Parametric estimations of the world distribution of income," Vox, January 22, 2010. 

For text:

http://www.voxeu.org/index.php?q=node/4508 

 

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