Parametric Estimations of the World Distribution of Income

76 Pages Posted: 26 Oct 2009 Last revised: 4 Mar 2021

See all articles by Maxim Pinkovskiy

Maxim Pinkovskiy

Massachusetts Institute of Technology (MIT)

Xavier Sala-i-Martin

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Date Written: October 2009

Abstract

We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006. The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions. Finally, we show that our results are robust to a battery of sensitivity tests involving functional forms, data sources for the largest countries, methods of interpolating and extrapolating missing data, and dealing with survey misreporting.

Suggested Citation

Pinkovskiy, Maxim and Sala-i-Martin, Francesc Xavier, Parametric Estimations of the World Distribution of Income (October 2009). NBER Working Paper No. w15433, Available at SSRN: https://ssrn.com/abstract=1493045

Maxim Pinkovskiy

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Francesc Xavier Sala-i-Martin (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States
212-854-7055 (Phone)

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