Global Distributions of Capital and Labor Incomes: Capitalization of the Global Middle Class

Abstract

This article studies global distributions of capital and labor income among individuals in 2000 and 2016. By constructing a novel database covering approximately the 80% of the global output and the 60% of the world population, two major findings stand out. First, the world underwent a spectacular process of capitalization. The share of world individuals with positive capital income rose from 20% to 32%. Second, the global middle class benefited the most, in relative terms, from such capitalization process. In China, the average growth rate of capital income was 20 times higher than in western economies. The global composition of capital and labor income is, therefore, more equal today than it was twenty years ago, and the world is moving towards a global multiple-sources-of-income society. (Stone Center on Socio-Economic Inequality Working Paper Series)

Inequality assessment in a dynamic framework with heterogenous agents

“…They show the evolution of inequality in both capital and labor income between 1989 and 2016. Similar results are made by Ranaldi (2021) looking at the global distributions of capital and labor income among individuals in 2000 and 2016. The extension of previous results to the N−individuals case is somewhat complex, because the number of involved functions and the related intervals to be considered, grows dramatically.…”

Stratification economics in the land of persistent inequalities

“…The reason for such a large gap lies in the degree of concentration of capital income among the top income earners of the distribution (Ranaldi, 2021) together with the dynamics of the factor income distribution (Ibarra & Ros, 2019; Samaniego, 2014). In aggregate terms, the share of total value added in the Mexican economy paid as retribution to capital represents about two‐thirds of the total product in the economy per year.…”

“…Furthermore, an implication of the large concentration of capital income at the top of the distribution is that most of the Mexican population relies almost exclusively on their labor income (Ranaldi, 2021). Thus, explaining the dynamics of labor income is relevant to understand the dynamics of the income of most of the Mexican population.…”

ABM-IAM: optimal climate policy under bounded rationality and multiple inequalities

“…This is motivated by evidence from the U.S., where the top 10% of households own 81% of the total value of those investments (Wolff 2014). A recent analysis indicates that the share of world individuals with positive capital income rose from 20% to 32% between 2000 and 2014 (Ranaldi 2021). We assume rents to be distributed among consumers according to an exponential distribution (see figure 3 in SM2).…”