STORY Aug 09, 2018

Are the poor catching up?

Are incomes of the poorest people growing faster or slower than the average of the population? In Uruguay, the poorest 40 percent of people earn 16 percent of the country’s total income. But between 2011 and 2016, their incomes grew by an average of 3.2 percent annually compared with 1.8 percent for the country as a whole - this means inequality in Uruguay is falling by this measure.

Growth in average incomes during periods between 2010 and 2015 was positive for 68 of 91 countries with comparable data, while the rest saw negative growth. The incomes of the poorest 40 percent grew faster (or contracted more slowly) than these averages in 51 of the countries, leading to a reduction in inequality. These are shown in blue in the chart above. The countries in red indicate a widening gap where incomes of the poorest grew slower than average. Additionally, the size of each dot represents the share of total income earned by the poorest 40 percent, with a small share reflecting a high level of inequality amongst the total population. This ranges from just 7 percent in South Africa, to above 20 percent in many European and Central Asian countries.