Evolving World Incomes

1. Jones on Evolving
World Incomes
Gaurav Sukhija, IITGN
March 14, 2014

2. The big picture
• What do we mean by income distribution?
• We’d like to know what percentage of
the world is below a certain level of
income, X.
• For our purposes, this is a sufficient
definition

3. World income
distribution 1960, 1988
Source: Jones (1997) pp.21

4. The goal of the paper
• What will the world’s income distribution look like
in the future?
• Three methods
• Keep policies fixed forecast the near term
• The further a country is from its steady state the
faster it will grow
• Variable policies through frequency of growth
miracles and growth disasters

5. Facts
• Note the x - axis
• In 1988 there is
an emergence of
two types of
countries
• The richest in
1960 grew, and
the poorest in
1960, receded
Source: Jones (1997) pp.21

6. Stabilization
• What does it take for this distribution to
stabilize?

7. Stabilization
• What does it take for this distribution to
stabilize?
• Similar growth rates for all countries
• Until this happens, the distribution will
change

8. Will the distribution
stabilize?
• Jones:Yes. Countries will converge to the
growth rate of technological progress

9. What do these look
like in recent times?
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Data source:World Bank

10. Some countries have
gotten richer
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Data source:World Bank

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But the poorest have
gotten poorer
Data source:World Bank

12. Who are these poor?
An#gua
and
Barbuda
Burundi
Benin
Burkina
Faso
Central
African
Republic
Cote
d'Ivoire
Cameroon
Comoros
Algeria
Ethiopia
Micronesia,
Fed.
Sts.
Guinea
Gambia,
The
Jordan
Liberia
Madagascar
Marshall
Islands
Mongolia
Mauritania
Malawi
Niger
Papua
New
Guinea
Rwanda
Senegal
Solomon
Islands
Sierra
Leone
Togo
Uganda
South
Africa
Congo,
Dem.
Rep.
Zimbabwe