Intercountry income inequality: world levels and decomposition between and within developmental clusters and regions

By applying the Theil index of income inequality and its decomposition between and within groups to income data adjusted for purchasing power parity on 115 countries between 1960 and 1985, it is found that the world-wide level of intercountry income inequality declined steadily by 0.584 per cent per annum , indicating a considerable overall convergen ceprocess . The decomposition analysis indicates that the dominant constituent of intercountry income inequality was the aggregate inequality between regions, followed by the aggregate inequality within regions. The decomposition also reveals that the contribution of income inequality among the clusters of LDCs, OECD and CPEs was very small.