INTRODUCTION
The chapter on “Post-1970 Trends in Within-Country Inequality and Poverty” was rather sketchy 13 years ago when the first volume of the Handbook of Income Distribution was published (Gottschalk and Smeeding, 2000).
A separate chapter was devoted to poverty measurement (Jantti and Danziger, 2000). The first Canberra Report (2001) on international standards for income distribution, much less the second report (2011), had not yet been published, and the Luxembourg Income Study (LIS) database had less than 15 years of comparable data on poverty and inequality for fewer than 20 rich nations, for which only trend data from 1980—1995 were available. The Organization for Economic Cooperation and Development’s (OECD) method for collecting comparable income distribution data was in its infancy, and the top incomes database was even younger still; Piketty (2001) was just publishing his paper on the long-term distribution of top incomes in France.The data world has come a long way in 14 years; now available are multiple sources of comparable (harmonized) household income data (overall and top incomes), wealth data, and poverty data. Even heeding warnings to take caution with harmonization of secondary data (Atkinson and Brandolini, 2001), the world now has a substantial number of more comparable data series, both across nations and over time. Still, there are limits to what can be accomplished in terms of comparisons. Here we rely on high- quality comparable level and trend data for income and income poverty from the 1970s on. While our measures dwell heavily on OECD countries, using both the LIS and the most recently available OECD data, particularly for the richest of these nations, improved availability has allowed us to add some data for “developing” nations and middle-income countries (MICs).[359]
Two other chapters in this volume cover longer-term trends in inequality and developing country inequality (Chapters 7 and 9, respectively). Chapter 23 focuses on the effects of policy on poverty.
We overlap to a small degree with these chapters. As argued below, our income and poverty measures are based on commonly defined and measured disposable income as well as pretax income for tax records. Consumption data are not yet comparable enough to use in cross-national analysis; wealth data comparability has begun but not yet flowered. There are only scattered cross-national studies of wealth or asset poverty. While the European Union (EU) and some OECD studies consider indices of material deprivation, such measures are not standardized enough in the rest of the world to be examined here, as elaborated in the next section, where we select yardsticks.Next we turn to income poverty measures, mainly those based on data from the LIS and the OECD, where we examine levels, trends, and both anchored and relative poverty. We then turn to the topic of overall income inequality levels and trends, based on these same sources, before turning to top-end inequality measures. In so doing we attempt to bridge the divide between household income distribution data, from surveys and registers, and top income data based on taxable income and income tax units, highlighting the extent of complementarity and substitutability between the two. The final section summarizes our review and the conclusions we draw.
8.2.