Professional Documents
Culture Documents
Hung 2021 Recent Trends in Global Economic Inequality
Hung 2021 Recent Trends in Global Economic Inequality
Hung 2021 Recent Trends in Global Economic Inequality
Ho-fung Hung
Department of Sociology, Johns Hopkins University, Baltimore, Maryland 21218, USA;
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
email: hofung@jhu.edu
349
INTRODUCTION
The advent of globalization has brought profound changes in the global political economy since
the 1980s. Expanding free trade and the free flow of investment and migrants fomented the trans-
formation of the distribution of incomes among the world population. These developments trig-
gered new social scientific debates about how globalization impacted the trend of global income
inequality.
Inequality has been one of the most significant forces that determine the well-being of the vast
majority of world population. High and increasing inequality could bring serious political reper-
cussions. It could create a backlash that jeopardizes the further advance of globalization. It is not
surprising that the literature on global income inequality has kept expanding over the past two
decades. This article is an introduction to the debate and new findings in that literature. Most
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
works in this literature look at income inequality instead of wealth inequality as a manifestation
of economic inequality. The focus on income inequality is due to the larger availability of in-
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
come data, which come from income tax data or household income surveys. Wealth data are more
difficult to come by, except in a few countries (mostly Scandinavian ones) with wealth taxes. The
wealthiest people around the world are also known to hide a portion of their wealth in offshore tax
havens. The researchers who try to overcome this limited availability of data to approximate global
wealth inequality show that the pattern of wealth inequality is close to that of income inequality
(Saez & Zucman 2016, Zucman 2019).
In the next section, I discuss the long-term historical development of global inequality and
how the recent trend might represent a departure from a centuries-old pattern. I introduce the
debate about globalization’s impact on inequality and the latest findings that point to overall global
inequality reduction. Then I examine new work that moves beyond the measurement of aggregate
inequality to address the changing shape of the global income distribution. The article ends with
a discussion about the political consequences of this distribution change, as well as remedies for
the conflictual and even destructive forces that this change unleashes.
350 Hung
of economic take-off when rural labor moved to industrial sectors at a large scale that depressed
wages. Inequality then decreased when investment in human capital and industrial wages both
increased. Rostow and Kuznets lead us to expect that both between-country and within-country
inequalities, and hence the combined global inequality, first increase and then decrease.
In the 1960s and 1970s, it became obvious that, except for Japan and later the Asian Tigers
(Hong Kong, Singapore, South Korea, and Taiwan), most developing countries did not witness
the promised catch-up in living standards and income with rich Western countries. Global in-
come inequality between developed and developing countries remained high and even increased.
This led to the rise of the dependency and world-system schools, which reject the modernization
assumption about catch-up and universal convergence of income in different parts of the world
in the long run. Instead, they emphasize the mechanism of exploitation and inequality reproduc-
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
tion: When developing countries interact with developed ones through trade and investment,
developed countries appropriate economic surplus from developing countries. As a consequence,
developed countries control ever more resources in the world and manage to invest, accumulate,
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
and grow. In contrast, developing countries, deprived of much of their economic surplus for in-
vestment and accumulation, remain poor and underdeveloped. These exploitative relations were
established in the Age of Empires under the colonial division of labor between colonizers and
colonized countries. These relations persisted after the end of formal colonialism, and the colo-
nial division of labor continues to be reproduced in the international division of labor between
developed and developing countries (Frank 1967, Wallerstein 1979).
After the 1980s, developed and developing countries sped up the dismantling of trade tariffs
and barriers for foreign capital, fomenting trade and investment globalization. Some social sci-
entists noticed that amid the advance of globalization, income inequality between developed and
developing countries started to shrink for the first time since the Industrial Revolution. However,
other researchers disagreed and claimed to find persistent global inequality using different mea-
surements. Most students of inequality also noticed a steep rise in within-country inequality across
the world under globalization. These studies ushered in a debate about whether globalization was
aggravating or reducing global inequality and why. Since the 1990s, research that measures and
explains the latest trend of global inequality has flourished. It is, in some sense, a renewed debate
between the theory of convergence and the theory of exploitation.
of globalization on income inequality deals with inequalities between nations, inequalities within
nations, and the true global inequality among the world population, which takes into account the
first two types of inequality at the same time.
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
352 Hung
decreasing in the late twentieth century. They also discover that this decrease is largely at-
tributable to the rapid industrialization of China and India. With an increasing proportion of
world manufacturing activities relocating into the jurisdictions of the two most populous nations,
these two countries witnessed rapid growth in average income. Their rapid income growth
relative to the wealthy countries, given their huge populations collectively constituting nearly
40% of world population, offsets the income decline of many African nations and others over the
past several decades, generating a trend of net reduction in between-country inequality. If China
and India are taken out from the calculation, however, population-weighted between-country
inequality among the remaining nations shows a remarkable increase.
Importantly, this conclusion about China’s and India’s impact on between-country inequality
was based on old PPP deflators, which were based on extrapolation of outdated price surveys con-
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
ducted in the 1980s or, as in the case of China and India, even earlier. In response to this problem,
the World Bank conducted a fresh international price survey in 2005 (and again in 2011 and 2017)
and revised the PPP deflators for most countries, including China and India. The new PPP defla-
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
tor, based on the new price surveys, shows that China and India’s GDPs had been overestimated
in PPP terms—their GDPs shrank under the 2005 and later PPP deflators. But research using
the updated PPP deflators for all countries for all years shows that even with the shrinking of
China and India’s GDP, between-country inequality, as measured by the most commonly used
Gini index and other indices, remains in decline since the 1980s. China and India are still decisive
contributors to this decline. What the new deflator brings is an increase in the absolute level of
the inequality measure for each year, while the declining trend of inequality over time remains the
same (Alderson & Pandian 2018, Hung & Kucinskas 2011; see also Bussolo et al. 2007).
While the direction of change in between-country inequality for the 1980s and 1990s is sensi-
tive to whether we use FX or PPP measurement, more recent data show a solid decline, regardless
of what measurement we use after about 2000. When measured in PPP, the decline in inequality
is a function of the growth of China and India before 2000, and inequality increases if we take out
China and India from the data. But after 2000, inequality ceases to increase and then decreases
even if we take out China and India. Acceleration of the growth of many other developing coun-
tries is evident in the 2000s. Such growth, to various extents, has been connected to the growth of
China and India. The boom in China and India drove up commodities prices. The two countries
became new, alternative sources of investments that benefit other developing countries (Alderson
& Pandian 2018, Hung & Kucinskas 2011, Jepson 2020).
Yet the measurement of between-country inequalities is only a rough approximation of the
true global income inequality among the world population, as it assumes everyone in each coun-
try shares the same average income (Milanovic 2005b; see also Dowrick & Akmal 2005). There
is plentiful evidence showing that globalization has a pronounced impact on within-country in-
equality. The focus on between-country inequality is gradually being replaced by a wave of work
that estimates the true global income inequality. Since an income survey sampling the whole world
population is not feasible, the estimations of global income inequality are mostly based on combin-
ing between-country inequality and within-country inequality in different countries. The estima-
tion of the trend in within-country inequality under globalization is, therefore, equally important
to our assessment of true global inequality.
and increasing within-country inequality is indirect. They postulate that increasing inequality
is a direct result of the retrenchment of the redistributive and regulatory state in the form of
the unraveling welfare state in advanced capitalist countries, the collapse of state socialism in the
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
East, and the retreat of state-led development in the developing world in the age of globalization
(Alderson & Nielsen 1999, 2002; Brady et al. 2005; Cornia & Court 2001; Lee et al. 2007).
The two causal linkages between globalization and within-country inequality coexist in most
places. In separate literature, other researchers find that growing within-country inequality un-
der globalization is prevalently expressed as growing geographical inequality between subnational
regions. Urban regions, connected to the global economy by their high-tech or financial indus-
tries, have thrived, while old centers of industrial and agricultural production in the hinterland
have withered (Alderson & Beckfield 2004, Brenner 2004, Castells 2000, Cornia & Court 2001,
Korzeniewicz & Albrecht 2013, Sassen 2001, Smith & Timberlake 2002, Taylor 2003).
354 Hung
the constructed data on individual incomes to estimate the true global income inequality for the
three benchmark years.
Assessing global income inequality has proven to be daunting, primarily because measure-
ments of within-country inequality vary widely across countries in sampling methods, objects
of measurement (disposable income or expenditure), and observation time points (Anand &
Segal 2008). These problems apply to Sala-i-Martin’s income share data, Goesling’s Theil/MLD
indices, and Milanovic’s household survey data. A second challenge for all these studies is that
the sparse availability of data for most countries compels researchers to limit their estimation
of global inequality to only a limited number of benchmark years. Using long-term trends
extrapolated from distant and limited-time points makes it difficult to detect errors caused by
fluctuations in income distribution.
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
In light of the above challenges, a few studies try to attain a better combination of within- and
between-country inequality by breaking down large, important countries into their subnational
units and calculating the weighted between-country inequality by treating those subunits as quasi-
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
individual countries. This strategy is viable as inequality in big countries mostly manifests itself as
an increase in inter-regional inequality (Milanovic 2005a). Milanovic broke down the most pop-
ulous countries—China, India, the United States, Indonesia, and Brazil—into their constitutive
units to assess their contributions to the true global inequality. Hung & Kucinskas (2011) broke
down China and India, the two countries most consequential in shaping overall global inequality,
into their province/state units. The results of this research show that even taking into account
the dramatic increase in within-country inequality in rapidly growing large countries, the overall
global inequality has been declining under globalization. One reason for this is that rapid growth
in internal inequality in the emerging economies has been driven mostly by the increase in the
relative income gap between the rich and poor rather than the absolute decline in income among
the poor. Even the poorest populations of those countries experienced growth in average income
faster than the world average income growth. Hence, the exploding internal inequality in those
countries would not cancel out the reduction in between-country inequality that globalization
engenders.
The most recent study by Milanovic corroborates this finding (e.g., Milanovic & Roemer 2016).
While Milanovic finds increasing true global income inequality in the earlier period, his latest
measurements show that global inequality between 1988 and 2011 has been either falling contin-
uously or rising and then falling, with the shift occurring at some point in the 2000s, depending
on varying assumptions in the measurement. This measurement is based on combining household
income surveys across the globe that are generalizable to no less than 80% of the world population
(Milanovic & Roemer 2016).
To sum up, though earlier research on global income inequality shows contradictory results that
depend on the measurement methods, later research that employed more updated data converged
on the finding that global income inequality declined in the early twenty-first century, regardless
of the measurement method. The question is whether and how long this trend will last. The
slowdown and economic crisis of China and India after about 2010 has already brought a headwind
for many commodity producers and countries increasingly reliant on Chinese investment in the
emerging world. Even if China and India managed to maintain their high-speed growth, they
could well generate competitive pressure on the development of other developing countries in the
long run, dampening the global inequality reduction effects of their growth (Hung 2015, Hung &
Kucinskas 2011, Korzeniewicz 2012). After the average incomes of China and India move past the
world average income, the continuing growth of the two populous countries will further enlarge
inequality between countries rather than reduce it (Hung & Kucinskas 2011). The rise of China,
India, and other large developing countries has already intensified new international and domestic
ment to the changing shape of global income distribution and its political repercussions. The
changing distribution of income among different social groups in the world creates a new balance
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
of power and new conflicts between these groups. These considerations open new discussions
about global distributive politics, parallel to the literature of class politics in national societies.
Looking at the changing shape of income distribution, we might get a better understanding of the
dynamics driving the processes behind inequality and its political consequences.
The Global One Percent and the Rise of the Global Middle Class
One early work looking at the shape of global income distribution is that of Arrighi & Drangel
(1986). The research looks at how the log of population-weighted GDP per capita is distributed
among nations and how the distribution changed over time in the postwar era. What they find is
a surprisingly stable trimodal distribution of income throughout most of the twentieth century.
This result has been recently reproduced by Karataşlı (2017) and Grell-Brisk (2017), as shown in
Figure 1.
The figure shows that the distribution of the world population along the income scale is not
even and does not constitute a continuum. On the contrary, the world population appears clustered
20
Percentage of total world population
18
Semiperipheral
16
economic zone
14 Peripheral
economic zone Core
12 economic zone
10
8
6
4
2
0
1 2 3 4 5
1990 log GNI per capita
Figure 1
Actual GNI distribution of the world population as of 1990. Figure adapted from Grell-Brisk (2017)
(CC-BY 4.0). Grell-Brisk reconstructs the figure from the data of the Global Inequality and Development
Research Working Group at the Arrighi Center for Global Studies, Johns Hopkins University. Abbreviation:
GNI, gross national income.
356 Hung
20
14
Peripheral Core
12 economic zone economic
zone
10
8
6
4
2
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
0
1 2 3 4 5
2015 log GNI per capita
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
Figure 2
Actual GNI distribution of the world population as of 2015. Figure adapted from Grell-Brisk (2017)
(CC-BY 4.0). Grell-Brisk reconstructs the figure from the data of the Global Inequality and Development
Research Working Group at the Arrighi Center for Global Studies, Johns Hopkins University. Abbreviation:
GNI, gross national income.
into three high-frequency zones: low, middle, and high income. The clustering of countries (or
world population) into these distinct groups attests to the world-system theory about the world
division of labor into core, semiperiphery, and periphery countries. This also supports the world-
system thesis that although specific countries can move across different income clusters over time
(the primary example being Japan, which traveled from the low-income to the high-income cluster
during the twentieth century), the overall trimodal structure remains intact over the years. This
study is consistent with the literature that sees global income inequality, as measured in aggregate
index, as persistent, if not increasing, in the postwar period until the 1980s.
Arrighi & Drangel’s (1986) analysis only focuses on several decades in the postwar era. Karataşlı
(2017) and Grell-Brisk (2017) extend their analysis into the twenty-first century to see whether
the trimodal structure remains stable with the advent of globalization and the rise of China and
India. They find that while most of the world population is located in the low-income crest of the
distribution under the trimodal structure in the postwar era up to 1990, a large portion has moved
to the middle crests at the turn of the twenty-first century, thanks largely to the rapidly growing
average income of China, and to a lesser extent India (Grell-Brisk 2017, Karataşlı 2017; see also
Borocz 2009) (see Figure 2). These findings illustrate that the falling aggregate global inequality
under globalization is driven by the rise of a massive global middle class, constituted mainly by
China and India.
A similar effort is the attempt by Milanovic (Lakner & Milanovic 2016, Milanovic 2016; see
also Alvaredo et al. 2018) to map how the changes in income under globalization are distributed
across the world population by combining household income survey data in different countries to
show real income change across income groups in the world from 1980 to 2008. His research maps
the now-famous elephant curve (see Figure 3), which represents how deepening integration of
the global economy impacts different social groups. The curve shows that the richest one percent
of earners in the world population saw a spike in real income between 1988 and 2008. This spike
on the right side of the graph is the elephant trunk. Even more pronounced is the drastic increase
in the number and income of the of middle-income people in the world over the same period.
This global middle class, who saw a rise in income even faster than the global one percent, is
composed of the population of China and, to a lesser extent, India. The rise of this broad group
www.annualreviews.org • Recent Trends in Global Economic Inequality 357
90
80
70
60
40
30
20
10
0
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
–10
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
–20
–30
0 10 20 30 40 50 60 70 80 90 100
Percentile of global income distribution
Figure 3
Global income growth, 1988–2008. Data are from the Lakner-Milanovic World Panel Income Distribution
(LM-WPID) database (https://www.worldbank.org/en/research/brief/World-Panel-Income-
Distribution).
of people constitutes the elevated back of the elephant. In between the elephant trunk and the
back is the global upper-middle class—or working class in wealthy countries—who saw nearly no
increase in real income for more than two decades (this group registers a decline in real income
in Milanovic’s earlier writings on the topic). Equally left behind are the lowest income earners
in the global economy, constituted by the populations of the poorest countries. Alvaredo et al.
(2018; see also Zucman 2019) made use of wealth data for China, Europe, and the United States
to proxy the change in different global wealth percentile groups in 1987–2017. They generated
a very similar elephant curve, in which the richest one percent and the middle percentile saw the
largest growth in wealth.
The elephant curve visualizes the winners and losers of globalization. One group of winners
is the global one percent, whose income soared as corporate profit in advanced countries rose.
Another group of winners is the vast population in China and India that benefited from extensive
relocation of manufacturing and business processes to their countries. The losers are the poor-
est countries in sub-Saharan Africa that were left out from the globalization process, as well as
the workers in developed countries that suffered from an exodus of well-paid manufacturing and
clerical jobs to China and India.
The distribution of income has always been a political question. The changing global dis-
tribution of income under globalization inevitably impacts both international politics and the
national-level politics of many countries. How these politics play out will determine the future
of globalization.
358 Hung
world system, which has always been grounded in a few oligarchic top earners and a small middle
stratum, leaving the vast majority of the population in the low-income strata. The states repre-
senting the new middle class of the world would naturally demand more influence in global affairs
and subvert the existing global order dominated by a few high-income Western core countries.
It resembles the challenge of the expanding middle class to the aristocratic-monarchial oligarchy
that brought down Europe’s ancient regimes or fomented democratic transition in many emerging
economies in more recent times.
Grell-Brisk (2017) and Borocz (2009) discuss more specifically the geopolitical challenge
brought by this income shift. The rise of the middle strata, led by China and India, has led to
the rising market power of these emerging states and hence their increasing demand for polit-
ical representation in existing global governing institutions, such as the Bretton Woods banks.
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
These new demands create conflicts with the few oligarchic high-income countries, who attempt
to preserve the status quo and their control of those institutions.
This tension is already translating into the intensifying trade war and other conflicts such as the
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
competition over the South China Sea between the United States and China. It also manifests itself
in the attempt of China and other emerging powers like India and Brazil to both demand reform
in status quo multilateral institutions such as the World Bank and create new ones challenging the
old, like the Asian Infrastructure Investment Bank and the BRICS (Brazil, Russia, India, China,
and South Africa) bank. Core countries have attempted different strategies in responding to the
global political demand from the global new middle class. They have tried to co-opt the rising
middle by supplementing the Group of Seven with Group of 20 meetings. They have also tried
taking advantage of the divisions between the rising middle powers, as well as divisions between
them and other developing countries. The United States’s attempt to seek the allegiance of India
as a geopolitical counterbalance to China is a case in point. Another example is the United States
positioning itself as the representative of the interests of poorer countries, as they increasingly see
China and other BRICS countries as new imperial powers (Bond 2016, Hung 2020a). These new
global conflicts might lead to peaceful transformation of the global governance system. They could
also lead to more deadly clashes, just like the rivalry between established economic powers like
Great Britain and late-developing powers like Germany in the early twentieth century resulted in
world wars (Hung 2020b).
In the meantime, students of the global commodity chain or value chain address the politics
of changing global stratification from the perspective of the global production network. Accord-
ing to the classical literature on the topic, a commodity chain is a linked production network
through which raw materials go through different stages of production in different nodes of the
chain to become the final products to be sold to consumers (Bair 2008). Commanding the struc-
ture of the commodity chain, transnational corporations (TNCs) based in core countries control
the largest portion of the value generated in the production process through the support of its
home states. They also locate and relocate different stages of production to different countries
to maximize their profits. The recent rise of emerging countries and the resulting fall in global
inequality are manifestations of the success of China and India in drawing higher value-added por-
tions of the production process into their jurisdictions (Brewer 2011, Costinot et al. 2012, Selwyn
2015).
China and other late industrializers, like the Asian Tiger states, resort to mercantilist policies
such as forced technology transfer and state funding of strategic high-tech sectors to move up the
value chain. This has precipitated direct competition with core TNCs. In response, TNCs and
their host states harnessed a wide range of methods to contain the ambition of emerging countries
to move up the value chain. These responses range from trade tariffs to enhanced control of high-
tech export. Whether the recent fall in global inequality will continue hinges on the result of this
creasing under capitalism, as the rate of increase of capital returns always outstrips the rate of
increase in wage income. Thus, the postwar reduction of inequality in wealthy countries was not
a result of any benign process of human development, as Kuznets suggests, but a consequence of
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
the world wars that massively destroyed wealth and capital. To Piketty, incessant rise of inequality
is the natural state of affairs under capitalism that can only be checked by anomalous calamities
like wars and natural catastrophes.
Milanovic (2016) rescues Kuznets by analyzing income inequality data spanning as long as eight
centuries for selected countries and claims to discover a Kuznets cycle over a long historical period.
He contends that income inequality in any country tends to grow constantly once the country’s
average income has moved beyond a subsistence level, as economic surplus always concentrates
into the hands of a few, who will use their high income to reproduce their advantage (through
influencing state policy, for example). But when inequality reaches a certain level, the reversal
of inequality will inevitably come through the political backlash against the one-percent elite.
Such backlash could come in malign forms, like conflict and civil war, or more benign forms, like
intentional government policy to reduce inequality.
To Milanovic (2016), both the malign and benign checks on inequality are built into the in-
equality process itself. While high inequality would trigger rebellion, conflicts, and externalization
of internal conflicts through wars, fear of such calamitous consequences of high inequality is the
impetus of benign reform that reduces inequality. Milanovic presents us with a less pessimistic
view than Piketty. He sees inequality reduction as, one way or another, always following rising
national inequality. From this perspective, the current backlash against the global one percent in
rich countries in the form of antiglobalization populist politics—in the form of either xenophobic
nativism or democratic socialism—signals the beginning of this self-correction process. Whether
these populist politics will lead us to malign or benign forms of inequality reduction, it is still too
early to say.
360 Hung
to the path dependence of institutional development that originated in colonial times. He finds
that countries that used to be in the core of the Spanish empire were entrenched in mercantilist
and labor-coercive institutions that lasted long after decolonization, rendering them more unequal
and lower in average income in the postcolonial period. In contrast, the periphery of the empire
developed more liberal, more entrepreneurial, and less labor-coercive institutions that continued
after decolonization, contributing to lower internal inequality and higher average income in those
countries. Extending the analysis to former British colonies, he finds a similar phenomenon of path
dependence. Therefore, the institutional legacies of colonialism are strong explanatory factors
for the persistent between-country inequality and differentiation of high and low within-country
inequality among countries.
Analyzing 85 developed and developing countries in the world over two centuries,
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
Korzeniewicz & Moran (2009) find a similar correlation between a country’s internal inequal-
ity and its position in the international income hierarchy. They look at the politics of inequality
export instead of path dependence as the main explanation. They find that internal inequality in
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
high-income countries often creates a backlash, prompting them to reduce internal inequality by
exporting inequality to low-income countries, exacerbating inequality there. As a result, countries
at the higher end of the global income scale tend to have lower within-country equality, while
those near the bottom of the scale tend to have higher within-country inequality.
They document that both intranational and international inequalities, despite all the changes
in recent decades, have remained stable in the long run. They show that the recent increase in
intranational inequality everywhere is, in fact, a minor change that looks more like a trendless
fluctuation from a long historical perspective. Each country has its inequality equilibrium, given
its institutional setting. Institutional forces act to restore equilibrium when inequality moves away
from it. The equilibria of inequality vary from country to country but cluster into two types: high
inequality equilibria (HIEs) and low inequality equilibria (LIEs). Countries with HIEs usually
show a Gini index of more than 0.5 over a long period. In contrast, countries with LIEs show
Gini indices lower than 0.35.
Most countries with HIEs are characterized by institutions, such as plantations in South Amer-
ica, that excluded a large portion of the population from property ownership and education in their
early years of modern development. Once these institutions and the corresponding high inequality
become entrenched, countries find it very difficult to reduce inequality, as any such attempts will
be easily rolled back by the established elite that fights to defend its ascribed privileges. In compar-
ison, countries with LIEs, mostly Western countries, are usually endowed with relatively equitable
property and political rights early on. Such an institutional setup induces the countries to establish
a redistributive tax system that further reduces inequality. When the meritocratic distribution of
income is established as a norm, countries maintain their LIE status for a long time. Korzeniewicz
& Moran (2009) see the discussion about the recent rise in inequality in rich democracies, for ex-
ample, as somewhat exaggerated. Despite all the attention to the increase in inequality in selected
European countries such as Britain, the average inequality among all European countries remains
more or less unchanged in recent years in a longer historical perspective (Korzeniewicz & Moran
2009).
In explaining why inequality-reinforcing institutions are mostly concentrated in low-income
countries and why institutions leading to LIEs are concentrated in high-income countries,
Korzeniewicz & Moran (2009) focus on the relational mechanism through which countries with
LIEs successfully shift their internal competitive pressure to countries with HIEs, constituting
an “export” of inequality from rich to poor countries (Korzeniewicz & Moran 2009, p. 72). The
politics of migration is an example of such a mechanism. Historically, the transfer of population
from poor to rich countries has helped reduce the income gap between countries (Korzeniewicz
States and Europe today and the global politics of checking the rise of increasingly assertive powers
like China are not ad hoc. This connection is deeply rooted in the long-running structural process
of inequality reproduction in the capitalist world economy.
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
362 Hung
recent decade. It is still uncertain whether this China- and India-driven hope of global inequality
reduction through development can hold up in the future (see Jepson 2020).
As previously discussed, the recent decrease in global inequality is mainly a result of the rapid
average income growth of China and India, which are the two most populous nations in the world.
Taking them out of the equation, high inequality between developed and developing countries has
not decreased significantly. Not optimistic about whether China and India’s economic boom can
easily spread to other developing countries, Milanovic (2016) contends that for most people in
the developing world, the most important force determining one’s income and circumstances is
not what one does, but in which country one is born, as it has always been. Someone born a
Bangladeshi citizen is highly likely to be significantly poorer than someone born a Swedish citizen,
and what he or she does over his or her life does not have much impact on that. Asserting that this
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
citizenship premium is the most prominent source of income inequality in the world population,
Milanovic advocates reducing global inequality by drastically reducing the barrier to migration
from developing to developed countries. A poor person born in a poor country will see his or her
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
income and circumstances improved substantially if he or she can freely move to a wealthy country.
Acknowledging the disruption and anxiety that massive migration would bring to the countries of
both origin and destination, Milanovic suggests that the migrants can be denied full citizenship in
the destination countries and be only allowed to work to earn income there.
This proposal of inequality reduction through (partial) migration is shared by Korzeniewicz
& Moran (2009). They argue that the three paths for an individual to improve his or her relative
living standards in the world include upward mobility within the national system of stratification,
economic development of the nation to which the individual belongs, and migration of the indi-
vidual from his or her country of origin to a higher-income country. While the country in which a
person is born is the biggest determinant of one’s lifetime income, Korzeniewicz & Moran (2009)
discuss the possibility of an open-border migration policy as a strategy to reduce global income
inequality. This proposal echoes many think tanks and nongovernmental organizations, which
advocate different forms of open border policies in the rich world as a path to address global
injustices (e.g., Sager 2020).
However, in this age of populism and xenophobia driven by globalization in the developed
world, it is beyond imagination that it would be politically feasible for core countries to keep their
doors open to periphery countries’ labor. It is inconceivable that the number of citizens from
developing countries moving to developed countries would be large enough to bring a significant
reduction in global income inequality. Here, we are back to square one, left with the one option
of relying on development as a means of reducing global income inequality.
Despite the lack of optimism about changing the status quo, debates about the sources of and
remedy to global inequality will surely continue to deepen. Besides the detrimental effects on the
well-being of the low-income population in the world, persistent global inequality also generates
many other undesirable effects on different facets of global humanity that we cannot afford to
ignore. One example is how global inequality and perennial poverty among the most downtrodden
directly or indirectly fuels terrorism (Krieger & Meierreiks 2015, Piazza 2007).
As another example, the high concentration of income and wealth in the top percentile is desta-
bilizing the global economic system. These top-percenters employ most of their economic re-
sources in speculative investment, which combines with the deprivation of a large population in
the developing world to create a structural imbalance of the global economic system. This sys-
tem is characterized by financial bubbles, overproduction, and deficiency in aggregate demand.
When the majority of the world population does not see their consumption power grow in line
with the growing productive power of the world economy, the whole system comes to rely on
debt-financed consumption in the developed world, which creates enormous financial instability.
DISCLOSURE STATEMENT
The author is not aware of any affiliations, memberships, funding, or financial holdings that might
be perceived as affecting the objectivity of this review.
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
LITERATURE CITED
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
Alderson AS, Beckfield J. 2004. Power and position in the world city system. Am. J. Sociol. 109(4):811–51
Alderson AS, Nielsen F. 1999. Income inequality, development, and dependence: a reconsideration. Am. Sociol.
Rev. 64(4):606–31
Alderson AS, Nielsen F. 2002. Globalization and the great U-turn: income inequality trends in 16 OECD
countries. Am. J. Sociol. 107(5):1244–99
Alderson AS, Pandian RK. 2018. What is really happening with global inequality? Sociol. Dev. 4(3):261–81
Alvaredo F, Chancel L, Piketty T, Saez E, Zucman G. 2018. World inequality report. Rep., World Inequal.
Database. https://wir2018.wid.world/
Anand S, Segal P. 2008. What do we know about global income inequality? J. Econ. Lit. 46(1):57–94
Arrighi G. 2007. Adam Smith in Beijing: Lineages of the Twenty-First Century. New York: Verso
Arrighi G, Drangel J. 1986. The stratification of the world economy: an exploration of the semiperipheral
zone. Review 10(1):9–74
Arrighi G, Silver B, Brewer B. 2003. Industrial convergence and the persistence of the North-South industrial
divide. Stud. Comp. Int. Dev. 38(1):1–31
Atkinson AB, Brandolini A. 2010. On analyzing the world distribution of income. World Bank Econ. Rev.
24(1):1–37
Bair J, ed. 2008. Frontiers of Commodity Chain Research. Stanford, CA: Stanford Univ. Press
Ben-David D. 1994. Trade, growth and disparity among nations. Rep., World Trade Organ., Geneva. https://
www.wto.org/english/news_e/pres00_e/pov2_e.pdf
Bergh A, Nilsson T. 2010. Do liberalization and globalization increase income inequality? Eur. J. Political Econ.
26(4):488–505
Bond P. 2016. BRICS banking and the debate over sub-imperialism. Third World Q. 37(4):611–29
Borocz J. 2009. The ‘rise of China’ and the changing world income distribution. In China and the Transformation
of Global Capitalism, ed. HF Hung, pp. 86–108. Baltimore, MD: Johns Hopkins Univ. Press
Bourguignon F, Morrisson C. 2002. Inequality among world citizens, 1820–1992. Am. Econ. Rev. 92:727–44
Brady D, Beckfield J, Seeleib-Kaiser M. 2005. Economic globalization and the welfare state in affluent democ-
racies, 1975–2001. Am. Sociol. Rev. 70:921–48
Brenner N. 2004. New State Spaces: Urban Governance and the Rescaling of Statehood. Oxford, UK: Oxford Univ.
Press
Brewer BD. 2011. Global commodity chains and world income inequalities: the missing link of inequality and
the upgrading paradox. J. World-Syst. Res. 17(2):308–27
Bussolo M, De Hoyos RE, Medvedev D, van der Mensbrugghe D. 2007. Global growth and distribution: Are
China and India reshaping the world? Policy Res. Work. Pap. 4392, World Bank, Washington, DC
Castells M. 2000. The Rise of the Network Society. Oxford, UK: Blackwell
Chase-Dunn C. 2006. Globalization: a world-systems perspective. In Global Social Change: Historical and Com-
parative Perspectives, ed. C Chase-Dunn, S Babones, pp. 79–108. Baltimore, MD: Johns Hopkins Univ.
Press
364 Hung
Clark R. 2011. World income inequality in the global era: new estimates, 1990–2008. Soc. Probl. 58(4):565–92
Cornia GA, Court J. 2001. Inequality, Growth and Poverty in the Era of Liberalization and Globalization. Helsinki:
UNU World Inst. Dev. Econ. Res.
Costinot A, Vogel J, Wang S. 2012. An elementary theory of global supply chains. Rev. Econ. Stud. 80(1):109–44
Dorn F. 2016. On data and trends in income inequality around the world. CESifo DICE Rep. 14(4):54–64
Dowrick S, Akmal M. 2005. Contradictory trends in global income inequality: a tale of two biases. Rev. Income
Wealth 51(2):201–29
Firebaugh G. 1999. Empirics of world income inequality. Am. J. Sociol. 104(6):1597–630
Firebaugh G. 2000a. Observed trends in between-nation income inequality and two conjectures. Am. J. Sociol.
106(1):209–21
Firebaugh G. 2000b. The trend in between-nations income inequality. Annu. Rev. Sociol. 26:323–39
Firebaugh G. 2003. The New Geography of Income Inequality. Cambridge, MA: Harvard Univ. Press
Firebaugh G, Goesling B. 2004. Accounting for the recent decline in global income inequality. Am. J. Sociol.
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
110(2):283–312
Frank AG. 1967. Capitalism and Underdevelopment in Latin America. New York: Mon. Rev.
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
Galbraith J. 2012. Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. Oxford,
UK: Oxford Univ. Press
Goesling B. 2001. Changing income inequalities within and between nations: new evidence. Am. Sociol. Rev.
66(5):745–61
Grell-Brisk M. 2017. China and global economic stratification in an interdependent world. Palgrave Commun.
3:17087
Heintz J. 2003. The new face of unequal exchange: low-wage manufacturing, commodity chains, and global inequal-
ity. PERI Work. Pap., Univ. Mass., Amherst. https://scholarworks.umass.edu/cgi/viewcontent.cgi?
article=1047&context=peri_workingpapers
Hung HF, ed. 2009. China and the Transformation of Global Capitalism. Baltimore, MD: Johns Hopkins Univ.
Press
Hung HF. 2015. China Boom: Why China Will Not Rule the World. New York: Columbia Univ. Press
Hung HF. 2020a. China and the Global South. In Fateful Decisions: Choices That Will Shape China’s Future, ed.
T Fingar, JC Oi, pp. 247–71. Stanford, CA: Stanford Univ. Press
Hung HF. 2020b. The US-China rivalry is about capitalist competition. Jacobin, July 11, 2020. https://www.
jacobinmag.com/2020/07/us-china-competition-capitalism-rivalry
Hung HF, Kucinskas J. 2011. Globalization and global inequality: assessing the impact of the rise of China
and India, 1980–2005. Am. J. Sociol. 116(5):1478–513
Jepson N. 2020. In China’s Wake: How the Commodity Boom Transformed Development Strategies in the Global
South. New York: Columbia Univ. Press
Karataşlı S. 2017. The capitalist world-economy in the longue durée: changing modes of the global distribution
of wealth. Sociol. Dev. 3(2):163–96
Kentor J. 2001. The long term effects of globalization on income inequality, population growth, and economic
development. Soc. Probl. 48(4):435
Korzeniewicz RP. 2012. Trends in world income inequality and the ‘emerging middle’. Eur. J. Dev. Res.
24(2):205–22
Korzeniewicz RP, Albrecht S. 2013. Thinking globally about inequality and stratification: wages across the
world, 1982–2009. Int. J. Comp. Sociol. 53(5–6):419–43
Korzeniewicz RP, Moran TP. 1997. World economic trends in the distribution of income, 1965–1992. Am. J.
Sociol. 102(4):1000–39
Korzeniewicz RP, Moran TP. 2000. Measuring world income inequalities. Am. J. Sociol. 106(1):209–14
Korzeniewicz RP, Moran TP. 2009. Unveiling Inequality: A World-Historical Perspective. New York: Russell Sage
Found.
Krieger T, Meierreiks D. 2015. Does income inequality lead to terrorism? Evidence from the post-9/11 era. Diskuss.
2015–04, Univ. Freiburg, Freiburg, Ger.
Kuznets S. 1955. Economic growth and income inequality. Am. Econ. Rev. 45:1–28
Lakner C, Milanovic B. 2016. Global income distribution: from the fall of the Berlin Wall to the Great Re-
cession. World Bank Econ. Rev. 30(2):203–32
McMichael P. 2011. Development and Social Change: A Global Perspective. Thousand Oaks, CA: SAGE
Milanovic B. 2005a. Half a world: regional inequality in five great federations. Policy Res. Work. Pap. WPS3699,
World Bank, Washington, DC. https://openknowledge.worldbank.org/bitstream/handle/10986/
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
8597/wps3699.pdf?sequence=1&isAllowed=y
Milanovic B. 2005b. Worlds Apart: Measuring International and Global Inequality. Princeton, NJ: Princeton Univ.
Press
Milanovic B. 2016. Global Inequality: A New Approach for the Age of Globalization. Cambridge, MA: Harvard
Univ. Press
Milanovic B, Roemer JE. 2016. Interaction of global and national income inequalities. J. Glob. Dev. 7:109–15
Niño-Zarazúa M, Roope L, Tarp F. 2016. Global inequality: relatively lower, absolutely higher. Rev. Income
Wealth 63(4):661–84
Piazza JA. 2007. Global poverty, inequality, and transnational terrorism: a research note. Perspect. Terrorism
1(4):12–20
Piketty T. 2017. Capital in the Twenty-First Century. Cambridge, MA: Harvard Univ. Press
Pomeranz K. 2000. The Great Divergence: China, Europe, and the Making of the Modern World Economy. Princeton,
NJ: Princeton Univ. Press
Rajan RG. 2010. Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton, NJ: Princeton
Univ. Press
Ramo J. 2004. The Beijing Consensus. London: Foreign Policy Cent.
Rostow WW. 1960. The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge, MA: Cambridge
Univ. Press
Saez E, Zucman G. 2016. Wealth inequality in the United States since 1913: evidence from capitalized income
tax data. Quant. J. Econ. 131(2):519–78
Sager A. 2020. Against Borders: Why the World Needs Free Movement of People. Lanham, MD: Rowman and
Littlefield
Sala-i-Martin X. 2002a. The disturbing ‘rise’ of global income inequality. NBER Work. Pap. 8904
Sala-i-Martin X. 2002b. The world distribution of income. NBER Work. Pap. 8933
Sassen S. 2001. Global City: New York, London, Tokyo. Princeton, NJ: Princeton Univ. Press
Selwyn B. 2014. The Global Development Crisis. New York: Wiley
Selwyn B. 2015. Commodity chains, creative destruction and global inequality: a class analysis. J. Econ. Geogr.
15(2):253–74
Silver BJ. 2003. Forces of Labor: Workers’ Movements and Globalization since 1870. Cambridge, UK: Cambridge
Univ. Press
Smith D. 1997. Technology, commodity chains and global inequality: South Korea in the 1990s. Rev. Int.
Political Econ. 4(4):734–62
Smith D, Timberlake M. 2002. Hierarchies and dominance among world cities: a network approach. In Global
Networks, Linked Cities, ed. S Sassen, pp. 117–44. New York: Routledge
Spence M. 2011. Globalization and unemployment: the downside of integrating markets. Foreign Af-
fairs, July/Aug. https://www.foreignaffairs.com/articles/united-states/2011-06-02/globalization-
and-unemployment
366 Hung
Stockhammer E. 2015. Rising inequality as a cause of the present crisis. Camb. J. Econ. 39(3):935–58
Taylor PJ. 2003. World City Network: A Global Urban Analysis. London: Routledge
Tridico P. 2012. Financial crisis and global imbalances: its labour market origins and the aftermath. Camb. J.
Econ. 36(1):17–42
Wade RH. 2004. Is globalization reducing poverty and inequality? World Dev. 32(4):567–89
Wallerstein I. 1979. The Capitalist World-Economy. Cambridge, UK: Cambridge Univ. Press
WorldBank. 2008. Global Purchasing Power Parities and Real Expenditure. Washington, DC: World Bank
Williamson JG. 1996. Globalization and inequality: past and present. NBER Work. Pap. 5491
Zucman G. 2019. Global wealth inequality. Annu. Rev. Econ. 11:109–38
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
Annual Review
of Sociology
Contents Volume 47, 2021
Prefatory Article
Access provided by 2409:4071:d08:cf7c:a4bd:5bba:f7bf:9709 on 03/13/24. For personal use only.
Social Processes
v
SO47_FrontMatter ARjats.cls May 28, 2021 16:45
Formal Organizations
vi Contents
SO47_FrontMatter ARjats.cls May 28, 2021 16:45
Demography
Policy
Annu. Rev. Sociol. 2021.47:349-367. Downloaded from www.annualreviews.org
Indexes
Errata
Contents vii