Working Paper
The global inequality boomerang

This paper focuses on the past and potential future evolution of income (or consumption) inequality in the world over the period 1981–2040. Inequality in the world has fallen by most common definitions since the late 1980s, and this is largely due to a decline in the between-country component of inequality.

We argue that the decline in global inequality over the last decades has spurred a ‘sunshine’ narrative of falling global inequality that has been rather oversold, in the sense, we argue, it is likely to be temporary.

We argue the decline in global inequality will reverse due to changes in the between-country component. We find there is a potentially startling global inequality ‘boomerang’, possibly in the mid-to-late 2020s, which would have happened even if there were no pandemic, and that the pandemic is likely to bring forward the global inequality boomerang.