ECONOMIC GROWTH CENTER YALE UNIVERSITY P.O. Box 208269 27 Hillhouse Avenue New Haven, CT 06520-8269 CENTER DISCUSSION PAPER NO. 784 INEQUALITY IN THE DISTRIBUTION OF PERSONAL INCOME IN THE WORLD: HOW IT IS CHANGING AND WHY T. Paul Schultz Yale University January 1998 Note: Center Discussion Papers are preliminary materials circulated to stimulate discussions and critical comments. This is a revised version of the paper originally written in March 1997. Financial support was provided by the Rockefeller Foundation. January 10, 1998 INEQUALITY IN THE DISTRIBUTION OF PERSONAL INCOME IN THE WORLD: HOW IT IS CHANGING AND WHY Running Title: Income Inequality in the World T. Paul Schultz Economic Growth Center Yale University PO Box 208269 New Haven CT 06520-8269 Fax: (203) 432-5591 Email: paul.schultz@yale.edu Abstract: The variance in the logarithms of per capita GDP in purchasing-power-parity prices increased prices increased in the world from 1960 to 1968 and decreased since the mid 1970s. In the later period the convergence in intercountry incomes more than offset any increase in within country inequality. Approximately two-thirds of this measure of world inequality is intercountry, three-tenths interhousehold within country inequality, and one-twentieth between gender differences in education. If China is excluded from the world sample, the decline in world inequality after 1975 is not evident. Measuring confidently trends in household and gender inequality will require much improved data. JEL Classification: D31, F02, J16 Key Words: world inequality, household inequality, gender inequality