The inequality we want: How much is too much?

Abstract

A key aspect defining the contemporary income distribution is the (increasing) share the top holds compared to the rest. This paper shows that income concentration increases towards the very top of the distribution, while the shares the middle-and upper-middle-income groups hold, remain stable across countries and over time. Traditional indicators less sensitive to changes at the extremes of the distribution might obscure inequality's actual dimension, and thus help perpetuate it. To avoid this, the ratio of the income share of the top 5 per cent over that of the bottom 40 per cent, denominated Palma v.2, could function as a complementary indicator for the measurement of inequality.

Can social protection address both poverty and inequality in principle and practice?

“…For a long time, the dominant belief was that growing inequality would accompany economic modernization and decrease poverty, and that poverty could therefore be tackled as a standalone issue (Kuznets, 1955). The hypothesis that income inequality would first increase and then subsequently decrease with economic progress (the U-curve theory) was drawn on to justify a complacent attitude to state intervention (Hall and Midgley, 2004; Krozer, 2015). Thus, there has been an ‘unfortunate divorce of poverty and inequality’ as inequality has only been treated ‘marginally’ (Bangura, 2011: 531).…”

“…In the Oxfam report Even it up , it is observed that ‘[a]cross the world, religion, literature, folklore and philosophy show remarkable confluence in their concern that an extreme gap between rich and poor is inherently unfair and morally wrong [,]suggesting a fundamental human preference for fairness and equality’ (Seery and Arendar, 2014: 12). Recently, evidence has mounted of exponential increases worldwide in one-dimensional income inequality (Krozer, 2015; Piketty, 2014). Concurrently, international attention has been drawn beyond the distributional challenges towards the relational dimensions of injustice, which underpin the interlocking facets of multi-dimensional capability and categorical inequalities, including income disparities, but also wealth, gender, health outcomes and so forth.…”

Türkiye İçin Palma Oranının Ulusal ve Bölgesel Düzeyde Analizi

“…Consequently, V20 (first 5% income share) values are double those of V19 (19 th ventile, second 5% income share) values. Furthermore, this figure has a 3 times higher standard deviation than V19, that leads us to recall the importance of the Palma ratio V.2 to analyze the degree of concentration of the inequalities as mentioned in Krozer's (2015).…”

“…Furthermore, the Palma ratio has triggered a question of measurement of inequality metrics as a political tool in order to decrease inequality. Krozer (2015) raises an additional ratio based on the findings of the Palma ratio, suggesting that this may be complementary to the Palma ratio. Accordingly, when the ratio of the first 5% to bottom 40% (Palma V.2) and the ratio of the first 1% to bottom 40% (Palma V.1) is calculated, the dimensions of the divergence within the first 10% become apparent.…”

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

“…Recent research suggests that, for many countries, inequality trends are mainly driven at the top and the bottom (with limited shifts in the middle of the income distribution). Such research thus promotes the use of the Palma ratio, which considers the aggregate income share for the top 90 percent versus the bottom 40 percent (Krozer 2015).…”