Contents

8.1. Introduction 594

8.2. ChoosingaYardstickandltsComponents 595

8.2.1 Consumption or Income? 596

8.2.2 The Definition of Income and Other Essentials 598

8.2.2.1 Reference Period, Income Units, and Resource Sharing 599

8.2.3 Data Source Comparability: Surveys, Tax Records, and the Rich 601

8.3.

8.3.1 Origins and Development of Poverty Measurement 604

8.3.2 Measuring Poverty 606

8.3.3 Measuring Absolute, Relative, and Anchored Poverty in Rich and Selected MICs 607

8.3.4 LevelofandTrendsinPoverty 611

8.3.5 RelativeVersusAnchoredPovertyandtheGR 616

8.4. Inequality in Income 619

8.4.1 Measures of Inequality from the Overall Distribution 619

8.4.1.1 Introduction 619

8.4.1.2 Distributional Statistics 620

8.4.1.3 Levels of Inequality in High- and Middle-Income Countries in the Late 2000s 622

8.4.1.4 Trends in the Distribution of Income Since 1970 633

8.4.2 Top Incomes 645

8.4.2.1 Introduction 645

8.4.2.2 Data and Methodology 652

8.4.2.3 Top Shares in the Late 2000s 668

8.4.2.4 Comparison of Trends Across Country Groups 669

8.4.2.5 Income Decomposition 676

8.4.2.6 Bridging the Gap Between Tax Statistics and Survey Data: Gini Versus Top Share 679

8.4.2.7 Are Top Income Shares Complementary to Household Survey Data? 680

8.4.2.8 Changes in Top Income Shares as Proxies for the Overall Income Distribution 683

Handbook of Income Distribution, Volume 2A

593

ISSN 1574-0056, http://dx.doi.org/10.1016/B978-0-444-59428-0.00009-6

8.5. Summary and Conclusions 687

Acknowledgments 690

References 690

Abstract

Like the other chapters in this volume of the Handbook of Income Distribution (and its predecessor), the aim of this chapter is to provide a comprehensive review of a particular area of research. We examine the literature on post-1970 trends in poverty and income inequality, up to 2010 or 2011 in most coun­tries. We provide measures of the levels and trends in each of these areas, as well as an integrated dis­cussion of empirical choices made in the measurement of poverty, overall income inequality, and inequality among those with top incomes.

JEL Classification Codes

D30, D31, D63, H23, I30, I32, N30, O15

Keywords

Trends in income inequality, Poverty, Gini, Top income shares, Inequality

8.1.