The Evolution of Global Inequality: Absolute, Relative and Intermediate Views

We compare absolute, relative and intermediate views on the evolution of global inequality between 1980 and 2007. Relative inequality measures are invariant to a uniform pro- portional increase of all incomes whereas absolute inequality measures are invariant to a uniform absolute increase of all incomes. We use a general intermediateness concept that is consistent with all major invariance concepts proposed in the literature on inequality measurement. This intermediateness concept states that an income distribution is as unequal as another one if it can be obtained as a weighted average of a uniform proportional and a uniform absolute increase of the incomes. We compute the critical relativeness level for which international inequality neither decreases nor increases. We …nd unanimity among all possible absolute inequality measures (i.e., absolute Lorenz dominance) that inequality has increased over the considered period. Further- more, one can go substantially in the direction of the relative view without losing this unanimous agreement on increased inequality over time.