Global income inequality has returned to levels recorded in the 1820s—when the Industrial Revolution produced sizable wealth gaps between the rich and poor—according to a new report released Thursday by the Organization for Economic Cooperation and Development (OECD).
The sweeping study, “How Was Life? Global Well-Being Since 1820,” uses historical data from eight world regions to present for the first time “systematic evidence” of trends in areas such as health, education, inequality, the environment, and personal security over the past 200 years.
The report reveals that great strides have been made in some areas such as literacy, life expectancy, and gender inequality. “People’s well-being has generally progressed since the early 20th century across a large part of the world,” it reads.
But while income inequality, as measured by pre-tax household income among individuals within a country, fell between the end of the 19th century until around 1970, it began to rise markedly at that point, perhaps in response to globalization.
“The enormous increase of income inequality on a global scale is one of the most significant—and worrying—features of the development of the world economy in the past 200 years,” the authors write. “It is hard not to notice the sharp increase in income inequality experienced by the vast majority of countries from the 1980s. There are very few exceptions to this.”
In a speech Wednesday in Strasbourg, France before the Parliamentary Assembly of the Council of Europe, OECD secretary-general Angel Gurría called on world leaders to “strengthen our efforts to reduce inequality.”
The financial and economic crisis has exacerbated rising inequality and fueled a social crisis. In OECD countries the income of the top 10 percent of the population is 9.5 times that of the bottom 10 percent, up by more than 30 percent in 25 years. Anchored poverty has increased by approximately 2 percentage points between 2007 and 2011, with much larger increases in countries that have experienced the deepest and longest downturns. The number of those living in households without any income from work has doubled in Greece, Ireland, and Spain. And worryingly for our future, the youth have now replaced the elderly as the group experiencing the greatest risk of income poverty.