Decomposing World Income Distribution: Does The World Have A Middle Class?

Using the national income/expenditure distribution data from 119 countries, the paper decomposes total income inequality between the individuals in the world, by continents and regions.We use Yitzhakis Gini decomposition which allows for an exact breakdown without a residual term of the overall Gini by recipients.We find that Asia is by far the most heterogeneous continent betweencountry inequality there is more important than inequality in incomes withincountries.Africa, Latin America, and Western Europe/North America are quite homogeneous continents with small differences between the countries so that most of their inequality is explained by withincountry inequality.If we divide the world into three groups the rich G7 and its equivalents, the less developed countries all those with income per capita less than, or equal to, Brazils, and the middleincome countries all those with income level between Brazil and Italy, we find that there is very little overlap between such groupings, i.e.very few people from the LDCs have incomes which are in the range of the rich countries.