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Global billionaires experienced the biggest increase in their share of wealth last year since the World Inequality Lab began keeping records in 1995, according to the research group’s analysis released Tuesday. Their net worth increased by more than $ 3.6 trillion in 2020 alone, bringing their share of global household wealth to 3.5%.

At the same time, the pandemic has pushed an estimated 100 million people in extreme poverty, bringing the global total to 711 million in 2021, according to a World Bank estimate cited by the analysis. Even more people would have fallen into poverty if many developed countries had not deployed relief efforts to protect their residents from the financial fallout of the Covid-19 pandemic.

“The covid crisis has exacerbated inequalities between the very rich and the rest of the population, ”said Lucas Chancel, lead author of the report and co-director of the laboratory. “Yet in rich countries government intervention has prevented a massive increase in poverty, which was not the case in poor countries.

The World Inequality Report is based on more than four years of work by over 100 researchers from around the world. Longtime inequality experts Emmanuel Saez and Gabriel Zucman, both at the University of California at Berkeley, and Thomas Piketty of the Paris School of Economics, coordinated the report with Chancel.

While Covid-19 has widened the gap between rich and poor, the world has long been one-sided. Financial deregulation, privatization and less progressive taxation in rich countries and large-scale privatization in emerging economies have helped improve the fortunes of the rich in recent decades, according to the report. Global inequality is close to what it was at the height of Western imperialism at the start of the 20th century, he noted.

“The work we’ve done really shows that in fact these claims – or this idea of ​​the spinoff economy – don’t stand up to scrutiny of the data,” Chancel said. “The main lessons from the last 40 years of data are that cuts to the highest tax rates have not triggered prosperity for all, as they were meant to trigger.”

The report recommends levying a tax on the rich to generate income that governments can use to reduce inequalities and invest in education, health and environmental measures. In the United States, some Democrats recently launched a plan to tax billionaires to pay for expanding their social safety net, but the effort quickly fizzled out.

Here are five other findings from the report:

The global wealth and income gaps are huge

The richest 10% of the world’s population control 76% of the world’s wealth by 2021, according to the analysis. In contrast, the poorest 50% own only 2%. The middle 40% have 22%.

When it comes to income, the richest 10% get 52% of global income, while the poorest 50% only earn 8%. The middle 40% is 39%.

The rich get even richer

The richest 1% captured 38% of global wealth growth between 1995 and 2021, while the poorest 50% got just 2%, according to the report.

The fortunes of the rich grew at a much faster rate, between 3% and 9% per year during this period. But the poorest half only saw their wealth grow between 3% and 4% per year. And since they have very little wealth, the overall amount has not increased much.

The wealth gap varies considerably by region

Latin America has the largest gap between the richest 10%, who control 77% of the wealth, and the poorest 50%, who own just 1%.

In contrast, Europe has the smallest gap. The richest 10% own 58% of total wealth against 4% for the poorest 50%.

The large number of public programs available to low-income and middle-class residents – including free education, healthcare and culture – are among the reasons Europe is a less unequal society, a Chancel said.

“Europe, with its very generous system of access to public services, has so far been able to contain rising inequalities, while the United States has not been as able to do so in recent decades “, did he declare.

The global income divide has narrowed a bit, but remains high

The global income gap, which takes into account incomes such as wages, salaries, interest and dividends, has narrowed somewhat since 1980, as China and some other major developing countries catch up with North America. and Europe.

“Average incomes have grown faster in China, India, Brazil, emerging countries than in Europe and the United States,” Chancel said. “Because of this effect, you have a reduction in global inequalities between those who live in China and those who live in other parts of the world.”

The average income of the richest 10% in the world was 38 times that of the poorest 50% in 2020, down from 53 times in 1980. However, the current level is comparable to the income gap in 1910, when the average income of the world’s top 10% was 41 times higher.

But even with rising average incomes in emerging countries like China and India, inequalities within these countries have grown.

“It has really slowed down progress in terms of reducing global inequalities,” he said. “And that has also slowed down progress in terms of poverty reduction.”

The study adjusts incomes across countries to account for differences in the cost of goods and services, a practice known as purchasing power parity.

Although much of the report’s data focuses on pre-tax income inequality and government benefit transfers, the researchers also examined the impact of these factors on the gap. They found that while taxes and transfers modestly reduce inequality, the gap remains “extremely high” in regions that were already very unequal.

Women’s income remains lower than men’s

The analysis provides the first estimates of global income inequality by gender.

The share of women in total labor income amounts to just under 35% for the period 2015-2020.

But the figure varies considerably by country, ranging from less than 10% to 45%. The share is highest in countries of the former Soviet Union and lowest in parts of sub-Saharan Africa and the Middle East.

At the current rate of growth, it will take more than a century for women’s incomes to reach parity with those of men, according to the report.


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