Malaysian Income Distribution in a Global Context A Khazanah Nasional Berhad and Khazanah Research Institute Seminar Session I - Global Poverty and Inequality: A View from the Global Consumption and Income Project 18 January 2018

1. THE WORLD TODAY :
A VIEW FROM THE
GLOBAL
CONSUMPTION AND
INCOME PROJECT
Arjun Jayadev
Azim Premji University
Kuala Lumpur Jan 18th 2018

3. WHAT IS THE GCIP?
o The Global Consumption and Income Project (GCIP) is a project that aims
to describe the changing material living standards of the world population
in as careful, comprehensive and comparable a way as possible.
o It centres on two new datasets (The Global Consumption Dataset (GCD)
and The Global Income Dataset (GID)).
o The benchmark version estimates the monthly real consumption and
income of quantiles of the population (a ‘consumption/income profile’) in
the vast majority of countries in the world (more than 150) for every year
over more than half a century (1960-2013 or latest year for which
estimation is sought) from survey data
o Issues handled: Consumption vs. Income. Concept of Welfare, Choice of
survey, imputing top incomes etc.

4. THE STORY SO FAR
 Poverty falling, but depends on the poverty line
 Global Inequality falling but high
 Global Inequality moving to within country from between country
 Inequality Convergence
 Chinese impact is perhaps most significant
 Burgeoning Middle Class
 Prospective concerns
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6. CHANGE IN NATIONAL
POVERTY HCRS

7. POVERTY IN WORLD, AND
EXCLUDING CHINA, INDIA

8. POVERTY IN WORLD, AND
EXCLUDING CHINA, INDIA

13. KERNEL DENSITY
SUPERPOSITION FOR WORLD
CONSUMPTION

14. GLOBAL GROWTH INCIDENCE
CURVE
Consumption
Income

17. DECOMPOSITION OF GLOBAL
INCOME INEQUALITY
GE(0) – Mean Logarithm Deviation
22
19
22
28
36
43
78
81
78
72
64
57
0 10 20 30 40 50 60 70 80 90 100
1960
1970
1980
1990
2000
2010
Within Between

18. AVERAGE WITHIN-COUNTRY
INEQUALITY

21. 1990 2010

22. 0
1
0
2.1
5.4
21.9
10.5
21
0 5 10 15 20 25
Prop of Chinese in top 10% of the World
Prop of Chinese in top 20% of the World
Prop of World top 10% who are Chinese
Prop of World Top 20% who are Chinese
2010 1990

23. 1/19/2018 23

25. 1/19/2018 25

28. 1/19/2018 28

29. 1/19/2018 29

30. 1/19/2018 30
28303234
1980 1990 2000 2010 2020
year
USA
28303234
1980 1990 2000 2010 2020
year
UK
28303234
1980 1990 2000 2010 2020
year
Germany
28303234
1980 1990 2000 2010 2020
year
Canada
in percent
Income share of the middle four deciles 1980-2013
Data from
Branko
Milanovic

31.  Global Inequality increasingly a matter of justice
 After China, India, most progress needs to be made in Africa
 Unlikely.
 Tensions: Outcomes are determined by global forces, but political
decision-making is often at the local level
 Politics of radical populism (mostly right-wing).
 Plutocracy
 Liberalism inadequate: need for redistributions locally
 Globally migration issue only promises to grow more compelling
 Planetary boundaries will begin to bite
 Currently, a failure in institutional mechanisms to deal with these
threat along all fronts
 Challenge of our times
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32.  Productive structures and the relations of people to them are
crucial, though transfer policies also play a role (e.g. Brazil)
 Institutions and policies that influence processes as well as
outcomes: pre-market (e.g. education and asset ownership), In-
market (e.g. bargaining power, equitable treatment and ease of
participation) and post-market (e.g. compensatory transfers)
elements.
 Inclusive Growth requires both Growth and Inclusion!
Equitable and effective access for individuals, regions and
social groups. Both opportunities and outcomes matter.
 Danger of permanently locking-in high inequalities, through
political, social and economic mechanisms (e.g. China).