Authors: Maxim L. Pinkovskiy, Xavier Sala-i-Martin, Kasey Chatterji-Len, and William Nober
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Staff Reports
Inequality Within Countries is Falling: Underreporting Robust Estimates of World Poverty, Inequality, and the Global Distribution of Income
Number 1125
September 2024
September 2024
JEL classification: C83, D31, D33
Household surveys suffer from persistent and growing underreporting. We propose a novel procedure to adjust reported survey incomes for underreporting by estimating a model of misreporting whose main parameter of interest is the elasticity of regional national accounts income to regional survey income, which is closely related to the elasticity of underreporting with respect to income. We find this elasticity to be substantial but roughly constant over time, implying a large but relatively constant correction to survey-derived inequality estimates. Underreporting of income by the bottom 50 percent of the world income distribution has become particularly important in recent decades. We reconfirm the findings of the literature that global poverty and inequality have declined dramatically between 1980 and 2019. Finally, we find that within-country inequality is falling on average and has been largely constant since the 1990s.
Author Disclosure Statement(s)
Maxim Pinkovskiy
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Xavier Sala-i-Martin
I am writing in regards to the paper "Inequality Within Countries is Falling: Underreporting-Robust Estimates of World Poverty, Inequality and the Global Distribution of Income" with Maxim Pinkovskiy, Kasey Chatterji-Len and William Nober. I do not have anything to disclose.
Kasey Chatterji-Len
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Will Nober
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Xavier Sala-i-Martin
I am writing in regards to the paper "Inequality Within Countries is Falling: Underreporting-Robust Estimates of World Poverty, Inequality and the Global Distribution of Income" with Maxim Pinkovskiy, Kasey Chatterji-Len and William Nober. I do not have anything to disclose.
Kasey Chatterji-Len
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Will Nober
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Suggested Citation:
Pinkovskiy, Maxim, Xavier Sala-i-Martin, Kasey Chatterji-Len, and William Nober. 2024. “Inequality Within Countries is Falling: Underreporting Robust Estimates of World Poverty, Inequality, and the Global Distribution of Income.” Federal Reserve Bank of New York Staff Reports, no. 1125, September. https://doi.org/10.59576/sr.1125
Pinkovskiy, Maxim, Xavier Sala-i-Martin, Kasey Chatterji-Len, and William Nober. 2024. “Inequality Within Countries is Falling: Underreporting Robust Estimates of World Poverty, Inequality, and the Global Distribution of Income.” Federal Reserve Bank of New York Staff Reports, no. 1125, September. https://doi.org/10.59576/sr.1125
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