Abstract

This study investigates the world income inequality between 1820 and 2008 decomposing international inequality into between- and within-region factors. Our estimates show increase of inequality between 1820 and the 1960s. Within-region inequality increased a lot in the very long run, mainly led by within-West inequality in nineteenth century and by within-East Asia inequality in the latter half of twentieth century. However, between-region inequality increased more significantly and was the main cause behind the very strong increase in global inequality in these two centuries. This process appears to have come to an end during the second half of twentieth century, a high level of stagnation of world inequality inthe 1970s and the 1980s followed by a decline inthe 1990s and more strongly in the 2000s, mainly due to the rapid growth in countries such as China, India, Indonesia, etc. This decline in world inequality was accompanied by decrease of between- and within-region inequality, although the speed of the former is faster than the latter.

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