Document Type

Journal Article


This analysis of global income disparity applies the Theil's entropy index of income inequality and its decomposition fonnula to the 8 regional groupings of the World Bank. Overall two trends emerge: (I) inter-regional inequality dominates the overall global inequality and the domination becomes absolute over time, and (2) inter regional inequality increases while intra regional inequality decreases over time. Secondly, the "Kuznets' inequality hill" was found to be scalloped. The cyclical behavior of global inequality can be explained by uneven and compensatory changes in global income. Third, we have tested for the major sources of income inequality change. Lastly, the tests of causal relationship between the per capita GDP growth rate and income inequality accumulation rate suggest statistical independence between the two series.