Wealth inequality, also known as the wealth gap, is a measure of the distribution of wealth—essentially the difference between the richest of the rich and the poorest of the poor—in a given country, state, city, or demographic group. Wealth inequality is closely related to income inequality, which tracks the money people earn. However, wealth inequality includes not just income, but also the value of bank accounts, stocks and investments, homes, and personal possessions such as cars, jewelry, artwork, and other valuables. Wealth inequality is a major cause of unequal living standards in many communities.
Research suggests that globalization has reduced global wealth inequality between nations but has increased wealth inequality within nations. Typically, developing countries are characterized by greater inequality than developed countries. However, there are exceptions to this rule: in some developed countries, such as the United States and Russia, the Gini coefficient is generally high.
Wealth inequality and the Gini index
The Gini index, or Gini coefficient, is a statistical measure of wealth distribution developed by the Italian statistician Corrado Gini. The Gini index is used to gauge economic inequality by measuring income distribution, also called wealth distribution. The Gini coefficient ranges from 0 to 1. A coefficient of 0 represents perfect equality, a country (or other people group) in which everyone had the same income. The closer to 1 the coefficient is, the greater the wealth inequality. Gini coefficient is also expressed as a percentage in which 0% is perfect equality and 100% would be the maximum possible inequality.
Top 10 Countries with the Highest Wealth Inequality (World Bank Gini index):
- South Africa - 63.0%
- Namibia - 59.1%
- Suriname - 57.9%
- Zambia - 57.1%
- Sao Tome and Principe - 56.3%
- Central African Republic - 56.2%
- Eswatini - 54.6%
- Mozambique - 54.0%
- Brazil - 53.4%
- Botswana - 53.3%
South Africa’s income inequality has become worse over the years. The top 1% of earners take home almost 20% of income and the top 10% take home 65%. That means that 90% of South African earners take home only 35% of all income. Incomes in South African remain to be racialized, gendered, and spatialized, meaning that white people are more likely to find work (and work that pays better) than their black counterparts; female workers earn about 30% less than male workers; and urban workers earn about double that of those in the countryside.
For many countries in Africa, income inequality is rooted in their economic structures, in which a few high-income sectors generate significant wealth, but only for a small number of people, leaving the vast majority of the workforce trapped in lower-income sectors in which they earn far less in the lower-income sectors.
This inequality is often exacerbated by inadequate educational systems that fail to prepare all but the richest citizens for better-paying skilled jobs and by the presence of corrupt and/or oppressive governments. Additionally, while many countries in Eastern and Southern Africa enjoy a high concentration of resources (natural and human), many other African countries lack even basic resources such as arable land and clean water, which can hamper overall economic growth.
Top 10 Countries with the Lowest Wealth Inequality (World Bank Gini index):
- Slovenia - 24.6%
- Czech Republic - 25.0%
- Slovakia - 25.0%
- Belarus - 25.3%
- Moldova - 25.7%
- United Arab Emirates - 26.0%
- Iceland - 26.1%
- Azerbaijan - 26.6%
- Ukraine - 26.6%
- Belgium - 27.2%
Nine of the top 10 countries are located in Europe or on the Europe/Asia border (Azerbaijan). The top 1% of earners in Europe take only 12% of the total income and the bottom 50% of earners take 22% of income. For comparison, in the United States, which has more billionaires than any other country, the top 1% of earners take 20% of income and the bottom 50% of earners take 10%. The less inequality/greater equality in Europe is attributed to the fact that Europe has not let its market economy become a market society, where market forces control other areas of society such as education, health, and wages. Examples of this are social healthcare systems and more favorable labor markets.
