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Rising inequality in emerging economies: A bad thing?

Rising inequality in emerging economies: A bad thing?
Published 23 Jan 2014 

Oxfam's briefing paper on inequality continues to make waves. With factoids like 'the bottom half of the world’s population owns the same as the richest 85 people in the world' and 'almost half of the world’s wealth is now owned by just one percent of the population', the attention is not at all surprising.

Derek Thompson over at The Atlantic highlights that these specific statements measure 'wealth' inequality, rather than income inequality (h/t: The Dish):

Wealth isn't income. Salary is income. But investments—stocks, houses, or equity in a business—build wealth. Wealth comes from the money you don't immediately spend. Since poor people spend more of their income immediately, and rich people save/invest more of their income immediately, it's predictable that wealth inequality be much worse than income inequality.

 However, the report also highlights rising income inequality in a number of developing countries. This graph, based on the World Bank's Poverty and Inequality Database, shows a dramatic increase in income inequality in China since 1980:

It should be remembered that this doesn't mean the poor in China are getting poorer. While inequality has been rising in China, hundreds of millions of people have been lifted out of poverty. Can you have the former without the latter?

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