1. Lecture (ppt 2) Inequality: Concepts, Measures and Experience
Andrés Solimano
Course Prague – University of Economics, November 2014

2. Concepts of Inequality
Income (flow)
Wealth (stock)
Territorial activity
Opportunities
Gini coefficients

3. Measures of Inequality
Gini coefficient
Robin Hood Index (of redistribution).
Share of top 1 percent, top 5 percent.
Ratios of top 10 percent to bottom 40 percent.

4. Gini and Lorenz Curve

5. Different values for Ginis

6. Redistribution

7. Robin Hood Index

8. What is the Robin Hood Index?
The Robin Hood index is equivalent to the maximum vertical distance between the Lorenz curve, or the cumulative portion of the total income held below a certain income percentile, and the Perfect Equality Line, that is the 45 degree line of equal incomes.
The value of the index approximates the share of total income that needs to be transferred from households above the mean to those below the mean to achieve equality in the distribution of incomes.

9. Global Inequality
Wide differences in Gini coefficients (between 25 and 60 percent).
Increase in inequality in the US, UK, Russia, China since the 1980s.
No significant increases in inequality in Central Europe or Japan.

10. Lorenz Curve (129 paises)
Figure Lorenz Curves for Income and Wealth Distributions
Source: own elaboration based on World Bank’s WDI (2007) and Davies et al. (2006)
(129 countries, circa year 2000)
Source: own elaboration based on World Bank’s WDI (2007) and Davies et al. (2006) [WIDER-UNU Project on World Wealth Distribution]. See Annex for details.

11. Gini Coefficient (<30 percent)

12. Gini Coefficient (30-35 percent )

13. GINI (30-35 percent)

14. GINI (36-40)

15. Gini ( percent)

16. Gini (51-55)

17. Gini (56-60+percent )

18. Inequality of Income and Wealth
Income is less unequally distributed than wealth
Higher Gini coefficient for Income than wealth.
Labor income is less unequally distributed than capital income.
Market income is more unequally distributed than net income (adjusted by taxes and transfers).

19. Definitions Market Income= wages + profits+ rents + interests payments
Net Income= Market income plus transfers minus taxes
Net Wealth= Assets minus liabilities
= Financial assets + capital assets + housing minus liabilities

20. Gini Coefficient for Income and Wealth (OECD and World)
Andrés Solimano 20

21. Gini de Ingreso y Riqueza en la OECD

22. Size Distribution of Income and Wealth in the United States (1983-2010)

23. Wealth Composition in the United States (1983-2010)

25. Wealth and Income Distribution in the United Kingdom (2006-2008)

27. Gini by type of wealth asset in the United Kingdom

28. Wealth and Income Distribution in Chile

29. Composition of wealth in Chile by deciles

30. Income Distribution in South -Africa, 2008-2012

31. Income by racial group in South- Africa