Archives: Chapters

This chapter examines how political cleavages have evolved and what these transformations reveal about inequality and democracy. We begin with the decline of political working-class representation (Figure 8.1). We then turn to the disconnection of income and education political divides in Western democracies, which has produced “multi-elite” party systems where educated elites lean left and affluent elites remain on the right (Figure 8.2–Figure 8.5). Figure 8.6 widens the lens to non-Western democracies, where cleavages often follow ethnic, religious, or regional lines rather than the income–education divide. Figure 8.7–Figure 8.8 highlight the resurgence of territorial conflict in Western democracies. Figure 8.9 concludes by emphasizing the growing explanatory power of geosocial class, the combination of wealth and conurbation size, in determining political outcomes.

Political representation of the working class is low and declining

This section highlights a central paradox of modern democracies: while the principle of universal suffrage promises equal political voice, the working class has been persistently underrepresented  in  institutions of power, and this dimension of inequality has deepened in recent decades. Figure 8.1 documents the long-run decline of working-class representation in parliaments across France, the United Kingdom, and the United States¹. The figure plots the share of MPs whose last occupation before entering politics was a manual or blue-collar job, compared to the total number of MPs in each country. It shows that working-class representation has always been low and has further deteriorated in recent decades.

This disconnect between the social composition of legislative bodies and that of the electorate illustrates a central dimension of political inequality: the growing gap in descriptive representation. The erosion of political representation reshapes political priorities. Legislators from working-class origins are more likely to push for redistribution, stronger labor rights, and protections for vulnerable groups.  Their absence narrows the scope of policy debate, leaving structural inequalities unaddressed.

The result is a political system that, much like the trends documented in previous chapters, channels power and resources to the top of the distribution. Democracies today risk entrenching a system in which the working majority is politically marginalized.

Income and education divides have disconnected in Western democracies

A possible explanation for this persistent underrepresentation of the working class is the rise of “multiple-elites” political systems, where different elite groups, those with high education and those with high income, dominate opposing political camps. Figure 8.2 through Figure 8.5 shed light on this transformation over the past half-century for twenty-one Western democracies. They reveal the gradual disconnection of income and education divides, the reversal of the educational cleavage, and the emergence of new political alignments that increasingly set different elite groups in opposition to one another.

Figure 8.2 illustrates one of the most important shifts in the political landscapes of Western democracies over the past seven decades: the gradual uncoupling of income and education as determinants of the vote. In the 1950s and 1960s, politics in most Western democracies was organized along a relatively straightforward class-based axis. Low-income and low-educated voters rallied behind social democratic, socialist, and communist parties (“left-wing” parties), while high-income and highly educated groups supported conservative, Christian democratic, and liberal parties (“right-wing” parties). In the past decades, however, these two groups have diverged sharply.

On the one hand, education has become a strong predictor of support for the left. Higher-educated voters increasingly lean toward left parties, to the point where, since the 1990s, the top 10% of educated voters are systematically more left-leaning than the less educated majority. On the other hand, income remains firmly linked to the right. The top 10% of earners continue to prefer conservative or right-wing parties. The gap with the bottom 90% has remained negative: top-income voters are consistently less likely to support the left. This transition highlights a shift from “class-based” to “multi-elite” party systems, which now feature opposing camps comprising an educated “Brahmin left” and an affluent “merchant right” (see Gethin, Martínez-Toledano, and Piketty (2022); Gethin, Martínez-Toledano, and Piketty (2021); Gethin and Martínez-Toledano (2025)).

This  structural  transformation is  closely  related  to  educational expansion and the ensuing “complexification” of the occupational structure. By way of illustration, many high-degree but relatively low-income voters (e.g., teachers or nurses) currently vote for the left, while many voters with lower degrees but relatively higher income (e.g., self-employed or truck drivers) tend to vote for the right.

Importantly, this transformation has not been restricted to a few countries. It has unfolded across almost all twenty-one Western democracies included in the World Political Cleavages and Inequality Database, despite wide differences in their histories, institutions, and party structures. This common transformation has been closely linked not only to the rise of a new sociocultural axis of political conflict, but also to the convergence of parties on economic policy, political fragmentation, economic development, and educational progress (see Gethin and Martínez-Toledano (2025)).

Figure 8.3 documents the remarkable reversal of educational divides across different Western democracies. In the postwar decades, voters with low levels of education were the backbone of left-wing parties, while the highly educated leaned right. Today, the opposite holds: highly educated voters now disproportionately vote more for the left, while the less educated often support conservative parties.

This reversal has transformed left-wing parties from representing the industrial working class in the past into coalitions anchored in the educated middle and upper-middle classes in the present. These left parties increasingly attract highly educated “sociocultural professionals”, such as education and healthcare workers, public sector employees, and urban elites, whose concerns and political priorities extend beyond redistribution to issues such as climate change, minority rights, and gender equality. Meanwhile, less educated voters have turned toward conservative platforms.

This pattern is visible in nearly all Western democracies, though with varying intensity. Portugal and Ireland remain partial exceptions, with smaller or delayed reversals. Yet the broader trend is clear: education, once a strong determinant of support for conservative parties, has become a defining predictor of left voting in most Western democracies.

Contrary to education, the income divide has remained relatively stable. Figure 8.4 shows that higher-income voters continue to lean right. This enduring divide has meant that even as educational elites shifted left, affluent groups have largely remained on the right.

Yet the income divide has not been static. In many Western democracies, the influence of income on the vote declined during the late 20th century, as party competition increasingly shifted toward cultural issues. A striking case is the United States. In recent elections, high-income voters have shifted to the Democratic Party, becoming more likely than low-income groups to support the Democrats. This shift represents a historic reversal of the classic postwar pattern, which highlights how far the U.S. has moved toward a “high-income-left” coalition and illustrates the weight of sociocultural divides in shaping political conflict.

Figure 8.5 brings these dynamics together by plotting income and education gradients simultaneously. In the 1960s, parties lined up along a diagonal:  left-wing parties were supported by low-income and less educated voters, while right-wing parties drew support from high-income and highly educated voters. By 2000–2025, this alignment has fractured. Parties now cluster across different quadrants. Green parties occupy the high-education section but do not distinguish themselves in terms of income. Anti-immigration movements dominate the low-education space, appealing to both low- and high-income groups. Conservatives remain rooted in high-income voters but now draw support from segments of the less educated. Social democrats, socialists, and other left-wing parties continue to be supported by low-income groups but now attract a greater faction of higher-educated voters.

This fragmentation reveals that income and education now pull voters in different directions. The result is a fractured electorate where pro-redistribution coalitions are harder to sustain. The disconnection of income and education cleavages weakens the political potential to address inequality.

Income and education are not the only axes of political conflict in these Western democracies. Other divides (age, religion, and gender) continue to shape electoral behavior. With the exception of gender, which has undergone a reversal similar to education (women now lean more left than men), there is little evidence of generalized realignment along these other dimensions. Age, religiosity, and church attendance remain stable predictors of conservative voting, while younger, urban, and secular electorates lean to the left. Geography, particularly the rural–urban divide, has become increasingly salient. Its dynamics are analyzed in detail in Figure 8.7–Figure 8.8.

Figure 8.2–Figure 8.5 provide an explanation of why the decline of working-class representation in Western democracies, shown in Figure 8.1, has not been reversed. Today, politics is dominated by multiple elites, leaving workers politically fragmented and underrepresented. The fragmentation of electorates makes redistributive coalitions harder to sustain, even as inequality has risen sharply. The concentration of political influence among high earners and the highly educated mirrors the concentration of economic resources at the top. Political systems remain deeply structured by inequality, but the disconnection of income and education has made it harder for majorities to mobilize against it.

Non-Western democracies have different structures of political division

The patterns documented in Figure 8.2–Figure 8.5 show how twenty-one Western democracies have converged toward multi-elite systems, with education and income pointing in different political directions. In non-Western democracies, political cleavages follow much more diverse trajectories. Instead of a common move toward the “Brahmin left versus merchant right” configuration, income and education often remain aligned (see Figure 8.6), and other dimensions of political conflict (ethnicity, religion, caste, or region) play a more important role.

The evidence in Figure 8.6 for thirty-four non-Western democracies shows that income and education are closely aligned in determining electoral behavior. However, the strength of class divides varies widely, ranging from nearly absent in India, Indonesia, and Costa Rica, to exceptionally strong in Argentina, South Africa, and Poland.

The diversity of outcomes highlights how inequality interacts with national contexts. In some countries, income and education remain tightly linked to electoral behavior, unlike the Western reversal. In others, ethnicity, religion, or regional divides are more relevant dimensions of political conflict. The key insight is that there is no single trajectory of political realignment outside of the Western democracies. Socioeconomic divides are stronger or weaker depending on how they interact with other dimensions of political conflict. In South Africa, for instance, race remains a powerful determinant of political alignment, while in India, caste and religious identities significantly overlap with income and education divides. In Brazil and other Latin American democracies, class conflict continues to shape electoral behavior, but it often intersects with regional divides and legacies of inequality rooted in colonial history.

The reversal of the education cleavage which has been so central to Western democracies is much less common in non-Western democracies. This underscores that the multiple-elites trend is a localized rather than global phenomenon. Political cleavages are reshaped differently beyond the West, depending on historical legacies and institutional contexts.

The return of geography in political conflict: regional and rural–urban cleavages

Alongside the disconnection of income and education divides, geography has re-emerged as a central axis of political conflict (see Cagé and Piketty (2024)). Figure 8.7 and Figure 8.8 show how regional and rural–urban cleavages have deepened in recent decades, particularly in France. These divides recall earlier historical moments when territory shaped politics, but their renewed intensity has profound implications for today’s democracies. Preliminary evidence suggests that this finding also applies to other advanced democracies (e.g., the U.S., Britain, and Germany). In the case of France, gaps in political affiliations between large metropolitan centers and smaller towns have reached levels unseen in a century. Unequal access to public services (education, health, transportation, and other infrastructures), job opportunities, and exposure to trade shocks have fractured social cohesion and weakened the coalitions necessary for redistributive reform. As a consequence, working-class voters are now fragmented across parties on both sides of the aisle or left without strong representation, which limits their political influence and entrenches inequality.  In order to reactivate the redistributive coalitions of the postwar era, it is critical to design more ambitious policy platforms that benefit all territories, as they successfully did in the past.

Figure 8.8 tracks the long-run evolution of the urban–rural divide in France. In the late 19th and early 20th centuries, large cities leaned strongly toward the left, while rural areas favored conservatives. During the postwar decades, however, this gap narrowed, as class rather than geography structured political competition. By the 1990s, the pattern shifted again. Urban areas, with their diversified economies and higher education levels, increasingly supported left parties. Rural regions and small towns gravitated toward conservative parties. The most recent elections reveal the sharpest territorial split in over a century, with urban centers voting overwhelmingly for the left, while rural areas rallied to the right.

Figure 8.7 highlights how this cleavage has formed into a tripartite system in France (see Cagé and Piketty (2025)). The liberal-progressive bloc is heavily concentrated among the highest-income voters, particularly in affluent urban centers. The social-ecological (left) bloc draws support from diverse urban and younger populations, while the national-patriotic (right) bloc dominates among rural and peri-urban voters. This division fragments the working classes: urban workers lean left, while rural and small-town workers turn to the right.

The implications are far-reaching. Territorial divides complicate the possibility of broad redistributive coalitions by splitting working-class voters along geographic lines. As with the disconnection of income and education cleavages, geography fragments potential majorities for redistribution. France exemplifies this process, but similar dynamics are visible across Western democracies. Geography, once a muted force, has returned as a defining feature of political competition, reshaping how inequality translates into politics.

The explanatory power of geosocial class is stronger than ever

Now we turn to the growing importance of geosocial class, the combination of socioeconomic status and territorial location, in shaping electoral behavior (see Cagé and Piketty (2025)). Figure 8.9 traces this relationship in France from the mid-19th century to the present and shows that its explanatory power has never been as strong as it is today.

In France, geosocial class has influenced voting more in recent elections than ever before. This shows that factors like rural versus urban location, wealth, and types of jobs continue to shape politics more strongly than geography or identity. This finding contradicts the idea that politics has become dominated by purely cultural identity struggles. Instead, material and territorial inequalities remain powerful forces shaping electoral behavior.

Placed in the broader perspective of this report, the rise of geosocial class mirrors the dynamics of economic inequality documented in previous chapters. Electoral geography has become a mirror of inequality itself, demonstrating that democratic conflict remains deeply rooted in wealth inequality.

Main takeaways

The evidence presented in this chapter paints a clear picture: political cleavages in Western democracies have been profoundly restructured since the postwar years. Working-class representation in legislative bodies has always been low and has deteriorated further in recent decades (Figure 8.1). This exclusion mirrors the broader inequalities in income and wealth documented in earlier chapters and highlights how political voice itself has become more unequal.

Figure 8.2–Figure 8.5 provide an explanation  for  this  phenomenon. The disconnection of income and education has given rise to multi-elite party systems, with highly educated voters shifting left and high-earning voters remaining aligned with the right. The result is a “Brahmin left” versus “merchant right” structure, in which different elites dominate opposing coalitions and working-class voters are increasingly fragmented or underrepresented.

Beyond income and education, other divides, such as religion or age, remain important but largely stable for Western democracies. Only gender has shown a reversal comparable to education, with women now leaning more left than men. Geography , however, has re-emerged as a powerful cleavage (Figure 8.7–Figure 8.8), splitting electorates between metropolitan centers and rural peripheries. This territorial dimension deepens the fragmentation of working-class voters and complicates redistributive coalition-building.

Importantly, the explanatory power of geosocial class has never been greater (Figure 8.9). Economic resources  and  territorial  location together explain more of the variance in French electoral behavior today than at any point in the past 170 years. Political conflict remains anchored in structural inequalities. Electoral geography has become a mirror of economic divides, underscoring that democracy and inequality are deeply interrelated; the way that one evolves affects the other.

As for non-Western democracies, there is no common pattern, but rather a diversity of political profiles. In many countries, income and education remain closely aligned. Socioeconomic divides  are  stronger  or  weaker depending on how they interact with other dimensions of political conflict, such as ethnicity, caste, and regional identities. Unlike Western democracies, the multiple-elites system is far less common. This diversity underscores the fact that, although inequality shapes politics everywhere, the cleavages through which it operates are always mediated by local contexts.

¹ See Cagé (2024).

Wealth concentration has reached historic levels. Today, a few thousand multi-millionaires and billionaires command fortunes comparable to the annual incomes of entire countries. This raises a pressing question: are tax systems ensuring that those with the greatest means contribute their fair share to society? The evidence shows that they are not. In many countries, effective tax rates decline at the very top of the distribution. While middle- and upper-middle-income groups face stable or rising rates, the richest often pay proportionally less.

This chapter examines these issues. First, we explore why progressive taxation matters, showing its role in financing growth, reducing inequality, and safeguarding democracy. We then document regressivity at the top, where the wealthiest contribute proportionally less than lower-income households. Next, we consider how a minimum wealth tax could restore progressivity or at least prevent regressivity and raise the revenues necessary to decrease inequality. Finally, we highlight that international cooperation can increase the feasibility of reducing tax evasion in a world of mobile capital.

Why progressive taxation matters

A government with greater resources can invest more in public goods and productive projects that increase the well-being and opportunities of the population. Furthermore, taxes are not simply a way of raising revenue; they are one of the principal means for societies to determine who contributes to collective life and how. In a progressive tax system, higher-income and wealthier groups contribute   proportionally   more.

Progressive tax systems mobilize resources for public goods, reduce inequality, strengthen the legitimacy of tax systems by ensuring fairness, and limit the disproportionate political influence that extreme wealth can buy.

Figure 2.14–Figure 2.16 in Chapter 2 show why progressive taxation is important for redistribution. First, it can directly reduce inequality by securing larger contributions from those at the top. Second, it makes possible the funding of public goods, such as education, health, and social protection, which are key for reducing inequality (see Gethin (2023)) since they deliberately shift resources toward the middle and bottom of the distribution. Without progressive taxation, income gaps translate directly into unequal living standards.

A fairer tax system is also a more sustainable one. When citizens believe that everyone contributes according to their means, they are more willing to pay taxes and less likely to resist redistributive policies. This sense of tax consent is essential to sustaining social cohesion. Conversely, when households perceive that the wealthy can avoid or evade taxation while the burden falls disproportionately on them, resistance grows. Progressive taxation strengthens trust in government by making the system visibly fair: taxpayers see schools, hospitals, or infrastructure financed by collective contributions, and they see that the richest are not exempt. This legitimacy effect has profound implications for political stability.

Finally, Figure 7.1 highlights a way that unchecked wealth concentration can distort democracy (see Cagé (2024)). The top 0.01% in the United States now account for over 20% of charitable donations, steering much of philanthropy toward elite institutions or causes aligned with donors’ preferences. In France and South Korea, the richest 10% provide more than half of political donations. These patterns underscore how extreme wealth translates into political and cultural influence, undermining the principle of equal citizenship. Progressive taxation reduces these distortions by ensuring that great fortunes are less valuable as tools of political power.

Progressive taxation is not only a way to increase public revenue. It is also a mechanism to directly reduce inequality, fund redistributive public goods, foster social cohesion, promote economic growth, and safeguard the integrity of democratic representation.

Regressivity at the top

One of the most important facts highlighted in this report is that tax progressivity breaks down precisely where it should matter most: at the very top of the distribution. While tax systems are designed to appear progressive, effective rates often fall sharply for multi-millionaires and billionaires once we compare total taxes paid against their full economic income. Large parts of top incomes escape taxation.

Figure 7.2 illustrates one of the main paradoxes of modern tax systems: while tax codes in high-income countries are often designed to be progressive, they become regressive at the very top of the distribution (see Zucman (2024)). Regressivity emerges because the income tax fails at the top.  In France and the Netherlands, billionaires’ effective income tax rate drops to near zero because of tax avoidance. In the United States, anti-avoidance rules keep billionaire rates somewhat higher, but they still fall sharply compared to upper-middle groups. Tax avoidance primarily operates through two channels (see Alstadsæter et al. (2023) and Zucman (2024)): (i) delaying or avoiding dividend distributions and capital gains realizations, and (ii) using holding companies and similar legal structures to accumulate earnings tax-free.

Figure 7.3 situates this regressivity in historical perspective. Over the past three decades, global multi-millionaire wealth has soared, tripling relative to world income (see Alstadsæter et al. (2023)). In 1995, the global top 0.001% held assets equivalent to 12% of global income. Three decades later, their share has nearly tripled, reaching 33% by 2025. Put differently, about sixty thousand individuals now control wealth worth one-third of the world’s combined income. Tax systems meant to fund public goods and reduce inequality instead reinforce concentration at the very top. Unless corrected, regressivity at the top will continue to erode both fiscal capacity and democratic cohesion.

Safeguarding progressivity at the top

If today’s tax systems collapse into regressivity at the very top, the crucial question to ask is: how do we restore fairness? Figure 7.4 provides a straightforward answer: introduce a minimum wealth tax on centi-millionaires and billionaires (see Zucman (2024)). The figure simulates what would happen if governments in high-income countries implemented a tax of 1%, 2%, or 3% of wealth annually.

The results are striking. With no reform, billionaires face effective tax rates around 20%, well below the burden of households with lower incomes. A 1% wealth tax would modestly increase their contribution, but regressivity would remain. At 2%, the decline is essentially neutralized; centi-millionaires and billionaires would be brought back up to roughly the same tax burden as other taxpayers. At 3%, the system becomes modestly progressive again, with the very richest paying more than the rest.

A 2% tax rate is the minimum benchmark  for safeguarding non-regressivity.   This proposal builds on work by the EU Tax Observatory and the report titled “A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals”, prepared by Gabriel Zucman and commissioned by the Brazilian G20 presidency in 2024. The report shows that such a measure is technically feasible, administratively manageable, and politically transformative. A 2% minimum tax on global billionaires could  raise  between  $200  and $250 billion annually from about 3,000 individuals worldwide, funds equivalent to the entire health budgets of many low-income countries combined.

Momentum for this idea has accelerated in several countries. Some examples are Brazil, South Africa, Spain, and France. Brazil placed the billionaire tax on the G20 agenda during its 2024 presidency. Spain has also taken a leadership role internationally, co-launching with Brazil and South Africa in 2025 a platform at the UN to build support for a global billionaire tax. France debated a 2% tax on fortunes above €100 million earlier in 2025: the National Assembly approved it, but the Senate rejected the bill. The issue in France is at the center of the political debate. In the United States, Senator Elizabeth Warren and others continue to advocate for the Ultra-Millionaire Tax Act, which proposes a 2% tax on net wealth above $50 million and a 3% total rate above $1 billion.

Regressivity at the top is not inevitable. With a minimum wealth tax, governments could restore progressivity, mobilize substantial resources, and rebuild the legitimacy of fiscal systems in the age of extreme wealth. Implementing such a tax is ultimately a question of political will, whether societies choose to confront the concentration of wealth and demand fairer contributions from those at the very top.

Tax justice and the potential of a global wealth tax

The case for a global wealth tax rests not only on technical feasibility but also on justice. The previous section showed that a 2% minimum tax on billionaires would neutralize regressivity at the very top, raising $200–250 billion annually. Yet focusing exclusively on billionaires risks leaving most of the ultra-rich tax base untouched. Billionaires are only the tip of the iceberg. Below them lies a larger group of centi-millionaires, those worth at least $100 million, whose fortunes allow them to minimize contributions in similar ways, but who would escape any billionaire-only tax.

Figure 7.5 highlights the scale of revenue that could be mobilized under different scenarios. A 2% global tax on centi-millionaires would generate more than $500 billion annually, equivalent to 0.45% of world GDP.12 A moderate 3% rate would raise about $754 billion (0.67% of world GDP), ensuring tax progressivity. An ambitious 5% tax could yield a staggering $1.3 trillion per year (1.11% of global GDP). These are not marginal adjustments. They are sums on a scale comparable to today’s global public spending on health, education, or climate adaptation. In other words, taxing a fraction of extreme private wealth could decisively expand governments’ fiscal capacity to address humanity’s most pressing needs. As N. K. Bharti et al. (2025) showed for the Indian case, taxing a tiny fraction of the very wealthy can fund transformative investments while leaving the vast majority of citizens untouched. The logic is the same globally:  a modest tax on extreme fortunes can deliver benefits for billions.

Tax justice is both feasible and transformative. Taxing just 0.002% of adults worldwide could generate between 0.5% and 1.1% of global GDP in revenues. These resources could double public education budgets in low- and middle-income countries or finance large-scale climate programs. More than a technical tool, wealth taxation is a way of converting extreme private fortunes into shared investments for the collective good.

Figure 7.6 deepens the analysis regarding the baseline 2% minimum tax on centi-millionaires, illustrating the regional contrasts. East Asia alone, home to over 32,000 centi-millionaires, could generate a potential revenue of nearly $167 billion annually, surpassing the  potential  revenue  of  North America & Oceania ($142 billion). Europe could raise over $73 billion, while South & Southeast Asia could mobilize $63 billion. Even in regions with comparatively few ultra-rich individuals, such as Sub-Saharan Africa, a small number of centi-millionaires could still generate meaningful resources relative to their domestic economies.

To put these figures into perspective,  the  additional  global $503 billion that could be raised annually with a 2% wealth tax on centi-millionaires is greater than the total GDP of many middle-income countries. This sum would be enough to fully cover the combined public debts of numerous low-income nations in one year or to substantially improve the economic prospects of millions of people. In short, taxing fewer than 100,000 individuals could transform the fiscal capacity of governments worldwide and significantly reduce inequality. It would also help to reduce the inequality of opportunities across regions (Figure 7.7).

Tax justice thus has both distributive and political dimensions. On the one hand, redirecting extreme private fortunes into public investments can help finance education, health, and climate resilience on a global scale, reducing inequality. On the other hand, ensuring that all ultra-rich individuals contribute proportionally rebuilds trust in taxation. Citizens are more willing to support fiscal systems when they see that the very richest, not just ordinary workers, carry their fair share.

Coordination between countries strengthens  the  feasibility of reducing tax evasion and avoidance

No matter how well designed national tax systems may be, their effectiveness can be undermined if wealth can easily cross borders. The fortunes of multi-millionaires can be highly mobile, often hidden through offshore structures or shifted toward jurisdictions with low or no taxation. This section highlights both the opportunities that emerge when states act together to prevent this, and the actions that can be implemented unilaterally to reduce tax evasion.

Figure 7.8 documents a turning point in the fight against offshore evasion. For decades, up to 90–95% of offshore wealth went undeclared, depriving governments of billions in revenues. After the introduction of automatic exchange of banking information in 2016 under the OECD’s Common Reporting Standard, this share fell dramatically. Still, by 2022, about 27% of offshore wealth remained untaxed, roughly 3.2% of world GDP. The lesson is clear: global cooperation has proven possible and efficient in cutting offshore evasion by a factor of three in less than ten years. This decline in non-compliance represents a significant achievement and demonstrates that rapid progress on tax evasion is possible when there is sufficient political will.

Figure 7.9 highlights billionaire mobility: the share of billionaires living outside their country of citizenship rose from 6% in 2002 to over 9% in 2024. While most remain at home, relocation to low-tax jurisdictions threatens the integrity of national tax systems. Policy responses can follow two distinct paths. One option is partial international coordination through a “tax collector of last resort” rule, which allows a billionaire’s home country to step in and collect additional taxes when wealth is shifted abroad and taxed at very low rates. Another option is for countries to act independently through exit taxes, which require individuals to settle their tax bill on accumulated wealth the moment they change residence.

It is crucial to note that, while cooperation is important, waiting for a global consensus regarding a 2% wealth tax on centi-millionaires is unnecessary (see Zucman (2024)). The infrastructure for cross-border cooperation (automatic bank information exchange, beneficial ownership registries) is already in place, and enforcement mechanisms like exit taxes or “tax collector of last resort” rules could limit incentives for relocation. Many countries have already implemented rules to limit tax-driven changes in residency of high-net-worth individuals, including exit taxes. Countries implementing the minimum tax standard could build on these rules and strengthen them.

The broader lesson is twofold. First, coordination works: automatic information exchange and minimum taxation standards have already reshaped global tax governance. Second, leadership matters: a coalition of willing countries can move first, raising revenues and demonstrating feasibility and benefits without waiting for universal agreement. Given the globalization of wealth, tax justice is strengthened both with multilateral ambition and determined national action.

Main takeaways

This chapter has explored the role and potential of progressive taxation in an era of unprecedented wealth concentration. The starting point was to show why progressive taxation matters. Tax systems that mobilize revenues sustain growth by financing education, health, and infrastructure; they reduce inequality through redistributive spending; they build legitimacy by strengthening tax consent and social cohesion; and they curb political capture by limiting the unequal influence of the ultra-rich.

However, tax progressivity collapses precisely where it should matter most: at the very top. Figure 7.2 and Figure 7.3 demonstrate how effective tax rates fall for multi-millionaires and billionaires, even as their fortunes expand. Solutions exist. Figure 7.4 shows that a 2% minimum wealth tax would halt regressivity, while higher rates could restore progressivity. Current experiences in Brazil, South Africa, Spain, and France illustrate both the fertility of debates surrounding such measures and the feasibility of their implementation.

Figure 7.5 and Figure 7.6 show tax justice proposals using the Global Wealth Tax Simulator, an interactive tool developed by the World Inequality Lab. They demonstrate how taxing a tiny fraction of the population can finance transformative investments to address gross inequalities of opportunity (Figure 7.7). Finally, Figure 7.8 and Figure 7.9 underline that international cooperation is both necessary and highly effective in reducing tax evasion and avoidance. A coalition of the willing could limit tax evasion by targeting wealth mobility and strengthening global fiscal sovereignty.

Box 7.1: Explore the Global Wealth Tax Simulator

Debates over taxing extreme wealth often feel abstract. How much revenue could be raised? How many individuals would be affected? What level of tax would ensure fairness? To make these questions concrete, the World Inequality Lab has developed the Global Wealth Tax Simulator, an interactive tool that allows anyone—from researchers, policymakers, or journalists, to ordinary citizens—to design their own wealth tax.

The simulator works by enabling users to choose tax evasion thresholds and rates. It then calculates three primary outcomes: total revenues raised, the effective tax rates, and the number of individuals affected. For example, a global tax of 2% on fortunes above $100 million would generate nearly half a trillion dollars annually, while affecting only a few thousand people worldwide.

Beyond these numerical projections, the tool offers a way to visualize tax justice through tables and graphs. It shows how modest contributions from the very top of the distribution could transform public finances . The simulator invites engagement and delivers a simple message: the resources exist to reduce inequality and strengthen public goods. The question is no longer one of technical feasibility, but political will.

¹ The World Inequality Lab created the Global Wealth Tax Simulator (see Box 7.1) to help design wealth taxes. It allows users to model scenarios and visualize the potential revenues.

Climate change is advancing at a pace that far exceeds early projections. By 2025, the remaining carbon budget compatible with limiting global warming to 1.5°C above pre-industrial levels is nearly exhausted (Forster et al. (2025)). The cumulative consequences of extreme climate events are becoming increasingly visible, affecting livelihoods, infrastructure, and economic stability worldwide.

As the Climate Inequality Report 2025¹ shows, the climate crisis is unfolding in a world marked by profound economic inequality and highly concentrated wealth. These two dynamics are deeply intertwined. Wealthy individuals not only contribute disproportionately to global emissions but are also better shielded from the damages of climate shocks. They hold the financial, corporate, and political power to shape the pace and direction of the climate transition (see Figure 6.1).

Conversely, climate change and the policies designed to mitigate it are transforming how wealth is created, distributed, and preserved. The intensification of physical climate risks, the repricing of assets, and the reallocation of investments toward green sectors will have far-reaching implications for the global distribution of private and public wealth.

This chapter examines how wealth fuels climate change and how, in turn, climate change reshapes wealth inequality. It introduces an ownership-based perspective on emissions that reveals how capital ownership concentrates the power to pollute, and the responsibility for climate damages, at the top of the wealth distribution. It then explores the economic and social channels through which climate change and climate policies alter the distribution of private and public assets.

The climate crisis is also a capital crisis. To effectively address it, we must not only reduce emissions but also rethink how ownership, investment, and wealth are governed in the transition to a sustainable economy.

The carbon footprint of capital

The unequal contribution of rich and poor countries to climate change is one of the most striking manifestations of global inequality. At the international level, the average carbon footprint of the top 10% income group in the United States—measured by emissions linked to their consumption—is more than forty times greater than that of the top 10% in Nigeria, and over 500 times greater than that of Nigeria’s bottom 10%. At the global level, a person in the global top 1% income group emits, on average, around seventy-five times more carbon per year than someone in the bottom 50% (Bruckner et al. (2022)).

Most emission estimates traditionally attribute greenhouse gases to the final consumers of goods and services. This “consumption-based” approach highlights differences in lifestyle and consumption patterns. However, it overlooks another critical dimension of responsibility: capital ownership.

While many consumers have limited ability to alter their consumption, due to constrained budgets, a lack of information, or limited access to alternatives, owners of productive assets actively decide how and where resources are invested. They directly benefit from the profits generated by emission-intensive industries. An ownership-based approach, therefore, assigns emissions from production to those who own the corresponding capital stock.

Under this framework, an individual owning 50% of a company’s equity is attributed 50% of that firm’s emissions, whether directly or via intermediaries such as investment funds. Importantly, this approach does not allocate emissions generated directly by households, such as those from residential heating or private vehicle use, nor those linked to government consumption or capital ownership. The ownership-based approach discussed in this chapter only accounts for nearly 60% of global emissions that can be directly attributed to private capital ownership by individuals (Chancel and Rehm (2025a)).

Accounting for emissions through this ownership lens reveals a high degree of concentration.  In France, Germany, and the United States, the carbon footprint of the wealthiest 10% is three to five times higher when private ownership–based emissions are included. In the United States, the top 10% accounts for 24% of consumption-based emissions but 72% of ownership-based emissions. The share of the top 1% rises from 6% (consumption-based) to nearly 43% (ownership-based).

At the global scale, the contrast is even sharper. The top 1% accounts for 41% of all greenhouse gas emissions under ownership-based accounting, compared with 15% under the consumption approach. Conversely, the contribution of the bottom 50% drops from 10% to 3% (Figure 6.2). In other words, the average individual in the top 1% emits more than twenty-five times as much carbon as the global average citizen. Their share of emissions even exceeds their share of global wealth—estimated at 36% in 2022 (Chancel and Rehm (2025a)).

The extreme concentration of private ownership–based emissions stems from both the amount of wealth owned and the investment choices made. Wealthy individuals not only hold larger asset portfolios but also allocate them disproportionately toward high-carbon sectors.

As shown in Figure 6.3, every $1 million invested in business assets in the United States corresponds to roughly 143 tonnes of carbon emissions, compared with 75 tonnes for equities (Chancel and Rehm (2025a)). Similar patterns emerge in France and Germany.

The global top 10% allocates about half of their wealth to such carbon-intensive  holdings, often seeking higher-risk, higher-return investments that coincide with higher emissions. Hsu, Li, and Tsou (2022) find that high-emission companies yield, on average, 4.4 percentage points more in annual excess returns than low-emission peers—an implicit “pollution premium” that further incentivizes carbon-heavy investments.

From this ownership perspective, the nature of emissions changes across the wealth distribution. For low- and middle-income groups, nearly all emissions are linked to essential consumption—transportation, heating, or electricity. For the top 10%, and especially for the top 1%, emissions from capital ownership dominate, accounting for 75–95% of their total footprint in France, Germany, and the United States. This also means that the wealthiest have a far greater capacity to reduce emissions without compromising their living standards.

Taking a global view, net ownership positions reveal how investors in high-income countries profit from pollution abroad. Figure 6.4 shows that major European economies, Japan, and South Korea exhibit large positive net ownership-emission positions. In France, adjusting for international investment raises national emissions by 36%, reflecting the fact that French investors own polluting production facilities abroad whose emissions exceed those generated domestically by foreign-owned firms.

By contrast, many middle- and low-income countries show negative net positions: part of the emissions from their domestic production is ultimately attributable to foreign investors in richer countries.

These patterns point to a crucial implication:  climate regulations and taxation should take asset ownership into account. Evidently, stronger regulations on high-carbon investments are necessary. In addition, a carbon tax on wealth, based on the carbon content of owned assets or of investments, would arguably be significantly more progressive than a consumption-based levy. It would ensure that those who profit most from carbon-intensive activities, often across borders, contribute their fair share to the transition to a greener economy.

Decarbonizing at home, burning fuels abroad?

By focusing on investment in carbon-intensive  activities,  we can also bring to light current global contradictions. Even as many countries pledge to decarbonize domestically, capital continues to flow into fossil-fuel extraction abroad. This investment pattern is not accidental: it reflects the concentration of financial power among wealthy investors and corporations that operate across borders.

In 2025, global capital flowing into fossil fuel projects still amounts to approximately USD 1.1 trillion. “Clean” energy, including renewables, electricity grids, storage, and low- emission technologies, at the same time receives USD 2.2 trillion, or roughly twice as much as fossil fuels. Government policies have reinforced these trends. In response to the recent energy price spikes, fossil-fuel consumer subsidies tripled between 2020 and 2022. The environmental consequences of these investments are staggering. Fossil-fuel projects destroy ecosystems, pollute water and air, and displace communities (Shamoon et al. (2022)). More importantly, they lock in future emissions: most facilities are designed to operate for twenty to forty years, delaying the transition to clean energy.

Figure 6.5 illustrates the scale of the challenge. The potential emissions from fossil-fuel reserves currently in development or exploration are, by themselves, sufficient to deplete the carbon budget that would limit warming to 1.7°C . These emissions would come in addition to those from existing extraction sites.

Despite this, fossil-fuel projects remain financially attractive. As the International Energy Agency (2025) notes, investment in new oil, gas, and coal projects continues to rise, driven by short-term returns that overshadow long-term planetary costs.

Climate change already shapes the distribution of private and public wealth

The economic impacts of climate change are deeply unequal. Both between and within countries, poorer households and nations bear the heaviest burden. Global warming and associated extreme events disproportionately affect low-income populations due to higher exposure, greater vulnerability, and more limited capacity to adapt (Alizadeh et al. (2022); Burke, Hsiang, and Miguel (2015); Kalkuhl and Wenz (2020)).

Between 1961 and 2010, anthropogenic climate change is estimated to have widened the income gap between the world’s richest and poorest countries by roughly 25% compared with a scenario without climate change (Diffenbaugh and Burke (2019)). Within countries, the poorest households are more likely to live in areas exposed to environmental hazards and are less protected from their effects (Gilli et al. (2024); Palagi et al. (2022)).

At the global level, the bottom 50% of the population could bear up to 75% of total relative climate damages by 2050 (Bothe et al. (2025)). While absolute losses are higher in richer households, simply because they earn and own more, the relative impact on income and assets is vastly greater for poorer groups (Figure 6.6). A single flood, drought, or storm can erase years of accumulated savings, while for the wealthy, such shocks typically represent temporary financial setbacks.

Beyond income, the climate crisis affects nearly every form of wealth. Physical assets, such as housing, land, and infrastructure, are vulnerable to floods, storms, fires, and heat. Market evidence already shows declining property values in high-risk areas (Baldauf, Garlappi, and Yannelis (2020); Bosker et al. (2019)). Between 2020 and 2023, climate-related disasters caused an estimated €162 billion in asset losses across the European Union, roughly equivalent to the entire EU annual budget (EEA (2024)).

In developing countries, the impacts are far more devastating. The 2022 Pakistan floods caused damages worth about $40 billion (Mishra (2025)). Overall, 89% of the world’s flood-exposed population lives in low- and middle-income countries (Rentschler, Salhab, and Jafino (2022)).

Wealthier households are not immune, but they are better protected. They can diversify assets, relocate, or rely on insurance and public compensation.  In contrast, poorer households hold most of their wealth in housing and deposits, making them highly vulnerable to physical loss.

Insurance and public safety nets could mitigate these risks, but coverage remains highly uneven. Three in four people in low-income countries lack any form of social protection (World Bank (2025)). Even in high-income economies, only about 35% of climate-related losses are insured (EEA (2024)).

Climate change also exerts growing pressure on public wealth. At the municipal level, recurrent disasters erode property tax bases. In Florida, for instance, more than half of local governments are projected to be affected by sea-level rise by the end of the century, with 30% of their revenues derived from properties at risk of chronic flooding (Shi et al. (2023)).

National governments face rising fiscal pressures from reconstruction spending, emergency aid, and social protection. In the Caribbean, hurricanes have repeatedly driven spikes in public debt, while in the Middle East & North Africa, higher temperatures are associated with deteriorating fiscal balances (Giovanis and Ozdamar (2022); Mejia (2014)).

Financial markets increasingly price climate risk into sovereign borrowing costs, making it more expensive for vulnerable countries to access credit. This dynamic can create a vicious cycle: the countries most in need of financing for adaptation and mitigation face the highest interest rates (Cappiello et al. (2025)).

Over time, the erosion of both private and public wealth may further constrain governments’ ability to invest in climate resilience and public goods—deepening the inequality gap between those with the means to adapt and those without.

Climate policy and the future distribution of wealth

The coming decades will not only test the world’s capacity to reduce emissions, they will also redefine how wealth is distributed. Climate policy design will determine whether the net-zero transition becomes an opportunity to reduce inequality or a source of new disparities.

Market-based instruments, such as carbon taxes, can be regressive if poorly designed. In high-income countries, evidence shows that low-income households spend a larger share of their income on carbon-intensive goods, making them more vulnerable to price increases (Ohlendorf et al. (2021)). Compensation mechanisms, such as cash transfers or free energy quotas, are therefore crucial to ensure fairness.

Another major challenge lies in asset stranding. The accelerated phase-out of high-carbon infrastructure and industries implies that some assets will lose much of their value. Under a 1.5°C scenario, the upstream oil and gas sector alone could lose between $7 and 12 trillion in value (Jakob and Semieniuk (2023)). While most stranded assets are owned by wealthy investors in the Organisation for Economic Co-operation and Development (OECD ) countries, these losses represent only about 0.4% of their net worth (Semieniuk et al. (2022)), a tiny dent in their total wealth.

Public wealth, however, is more directly at risk. Governments own roughly one-third of the assets exposed to stranding, particularly in non-OECD countries (Semieniuk et al. (2022)). If public entities or development banks absorb these losses, fiscal space could shrink dramatically. Moreover, climate-related financial instability could lead to public bailouts, effectively transferring private losses onto taxpayers (Lamperti et al. (2019)).

Governments also face litigation risks through investor–state dispute settlements. If fossil-fuel projects protected by international treaties are canceled to meet climate targets, affected investors can sue for compensation. Potential claims from such disputes could reach $60–230 billion (Tienhaara et al. (2022)).

At the same time, the financing and ownership structure of green investments will shape tomorrow’s wealth distribution. The global transition to net zero will require an estimated $266 trillion in cumulative investment by 2050 (Buchner et al. (2023))—a fivefold increase from current levels.

Figure 6.7 illustrates two possible scenarios: if the richest 1% finance and own all new climate investments, their global wealth share could rise from 38% today to 46% by 2050. Conversely, if these investments are publicly financed and collectively owned, the top 1% share could decline to 26%.

The implications for public capital are equally significant. If the public sector undertakes and owns all required climate investments, public capital could rise from around 80% of GDP in 2019 to over 150% by 2050 (Figure 6.8). If private investors capture these opportunities instead, the private capital stock could climb to 245% of GDP , while public capital remains stagnant.

The distributional consequences of the green transition therefore depend not only on climate ambition but also on who owns the transition. Public policies that promote equitable financing, transparent ownership, and redistribution of green returns are essential to ensure that the path toward sustainability does not widen global wealth divides.

Main takeaways

Wealth and climate change are bound together by powerful feedback loops. The wealthiest individuals not only consume more but also own and profit from the assets that generate the majority of greenhouse gas emissions. When emissions are attributed through ownership rather than consumption, inequality appears even starker: the global top 1% account for over 40% of emissions, while the bottom half contribute almost none.

This concentration of both economic and environmental power shapes how societies confront the climate crisis.  Capital continues to flow into fossil-fuel production, locking in decades of future emissions, even as wealthy countries pledge to decarbonize. At the same time, the poorest populations, those least responsible, face the heaviest relative losses from climate impacts.

Climate change also redistributes wealth. It erodes private and public assets through physical damages, rising debt, and lower fiscal capacity, while green investments and asset repricing can further widen or reduce inequality, depending on who owns and determines the rules of the net-zero transition. A privately financed net-zero pathway would almost certainly reinforce global concentrations of wealth, whereas public investment and progressive taxation could transform the transition into a lever for equity.

The findings of this chapter point to a central conclusion: the climate crisis is a capital crisis. Effective climate action demands of us that we rethink investment regulations, ownership structures, and the taxation of capital. Enlightened policies such as  restrictions  on  new  fossil-fuel investments, progressive wealth taxes imposing an effective carbon penalty, and the expansion of public ownership of climate assets can accelerate the transition and help to reduce wealth inequalities. If we fail to design climate policies that tackle the distribution of capital and ownership patterns, we will miss a crucial opportunity to address another deeply entrenched form of inequality.

¹ See Chancel and Mohren (2025).

Since the mid-20th century, the international monetary system has exacerbated inequality by design. At its core there is a structural asymmetry: a privileged few countries have the advantage of borrowing cheaply and investing in relatively more profitable assets, securing income inflows. This advantage was first described in the 1960s as the “exorbitant privilege” of the United States, whose role as issuer of the world’s main reserve currency allowed it to pay less on what it owed than it earned abroad. What began as a U.S.-specific feature has since become a structural privilege of the rich world. Europe, Japan, and other advanced economies now enjoy similar benefits, while poorer countries face the opposite burden: they pay higher interest on their debts, hold assets that yield little, and transfer income abroad each year. In effect, rich countries have become global rentiers, systematically extracting resources from the rest of the world.

This chapter, based on Nievas and Sodano (2025), documents how the system works. First, we show how the U.S. privilege widened into a collective advantage for the richest 20% of countries. Second, we highlight a paradox: privilege persists even for a net debtor region such as North America & Oceania. Third, we explain how advanced economies became financial rentiers by design, through currency dominance, portfolio asymmetries, and institutional rules that perpetuate their advantage. Fourth, we examine how these asymmetries act as barriers to development, draining resources from poorer nations. The chapter concludes by arguing that these dynamics amount to a modern form of unequal exchange, echoing earlier colonial transfers. Finally, it calls for urgent reform of the international monetary, financial, and trade systems to address and reduce these inequalities.

The U.S. exorbitant privilege has evolved into a structural privilege of the rich world

The idea of “exorbitant privilege” was coined in the 1960s to describe the United States’ unique position in the world economy. This was not the result of singularly skillful investments but of the central role of the dollar. Given its preeminent role in the international monetary and financial systems, investors and central banks worldwide considered U.S. assets safe and liquid, and the country could therefore borrow at very low rates and reinvest abroad at higher returns.

New evidence unearthed by Nievas and Sodano (2025) shows that this advantage has expanded well beyond the U.S., which now owes 2% of its GDP to this exorbitant privilege. Figure 5.1 illustrates how the privilege has evolved into a broader feature of the global economy. Japan now records the largest benefits of this skewed system, close to 6% of GDP, while the Eurozone also has positive balances (about 1%). By contrast, emerging economies remain at a disadvantage: BRICS¹ countries record persistently negative excess yields, averaging 2% of GDP.

Figure 5.2 details this pattern further still. When grouped by income, only the richest 20% of countries, which are home to one-fifth of the global population, consistently present positive excess yields, equivalent to approximately 1% of GDP. The rest of the world records deficits ranging from 1% to 3% in the last decade.

Regionally, North America & Oceania, East Asia (excluding China), and Europe stand out as the main winners. Latin America, Sub-Saharan Africa, South & Southeast Asia, the Middle East & North Africa, Russia & Central Asia, and China remain net losers. Far from being a U.S. exception, exorbitant privilege has become a structural privilege of the rich world, reinforcing global inequality rather than narrowing it.

One of the paradoxes of global finance is that some regions can hold negative net foreign asset (NFA) positions yet still earn positive net investment income. The North America & Oceania region is the clearest example. It has long been the world’s largest net debtor, with foreigners owning more assets in North America & Oceania than what residents from North America & Oceania hold abroad (Figure 5.3). Yet year after year, the region records a surplus on net foreign capital income due to excess yields (Figure 5.4).

Figure 5.4 also shows how the richest 20% of countries consistently record positive income flows. Meanwhile, the bottom 80% are persistent net debtors and face negative income balances, reinforcing their disadvantage.

Rich countries are global financial rentiers by political design, not because of market dynamics

Figure 5.5 to Figure 5.7 reveal why the exorbitant privilege has persisted and extended: the global financial and monetary system has been deliberately structured to favor advanced economies.  Their role as issuers of reserve currencies, the composition of their external portfolios, and the cost asymmetries between assets and liabilities combine to make them global financial rentiers.

Figure 5.5 documents a foundation of this privilege: currency dominance. Over the last few decades, the U.S. dollar has remained the predominant medium of trade invoicing, financial asset denomination, and central bank reserves. The euro has also become, to a lesser extent, a major player since its creation. Other currencies play only marginal roles. This institutional inequality ensures persistent demand for dollar- and euro-denominated assets. This leads to persistently lower borrowing costs for the U.S. and Eurozone, whereas other economies are more exposed to debt in foreign currencies and vulnerable to exchange rate fluctuations.

Figure  5.6   highlights   the composition of cross-border portfolios. Rich countries hold equity and foreign direct investment on the asset side, which typically have higher returns, while their liabilities are predominantly low-cost debt securities. Poorer countries show the mirror image: they hold large shares of reserves, safe but low-yielding, while issuing liabilities in the form of high-cost debt and inward foreign direct investment (FDI). This asymmetry means that even when poorer countries save and accumulate foreign assets, those assets generate little return, while their liabilities remain costly.

Figure 5.7 complements this picture by comparing returns on investments directly. The richest 20% consistently earn more on their assets abroad and pay less on their liabilities. Over the last half-century, global returns on assets have fallen for all, but the decline has been steepest for poorer countries. More importantly, the liability costs have remained high or even increased for the poorer countries. Only the richest 20% have experienced a large decrease in liability costs. The result is a structural advantage for rich countries: they are “charged less” on what they owe.

These patterns are not the accidental outcome of market forces. They stem from policy design and institutional dominance. For instance, regulatory standards such as Basel III increased the demand for “safe” assets, consolidating the role of U.S. Treasuries and European sovereign bonds. Credit rating agencies, largely based in advanced economies, reinforce the perception of safety for rich-country debt and risk for poorer-country debt. Central banks worldwide accumulate reserves in dollars and euros, further entrenching the system. The broader implication is that the richest economies do not simply benefit from privilege; they actively shape and maintain it. By controlling the currencies, rules, and institutions at the center of global finance, they secure a rentier position that channels income from the rest of the world, thereby exacerbating inequality across countries.

Barriers for reducing inequality across countries

The financial asymmetries documented in this chapter are not only technical imbalances; they translate directly into barriers for development. Figure 5.8 illustrates how poorer countries systematically transfer resources to richer ones, constraining their fiscal capacity and long-term growth prospects.

The bottom 80% of countries devote a significant share of their GDP to net income outflows, which can be seen as the cost of financing the privilege for the top 20%. These outflows, averaging 2–3% of GDP each year, represent resources that could otherwise be invested in schools, hospitals, or infrastructure. The cost is particularly heavy for low-income regions, where financing privilege often demands higher budgets than health expenditure. By contrast, rich countries receive steady inflows, reinforcing their ability to sustain higher living standards.

The implication is stark. The current financial system perpetuates global inequality by design. In many ways, these income transfers function as a modern form of unequal exchange, subtler than colonial extraction, but no less constraining for the development paths of poorer nations.

Need for reforms in the international financial, trade, and monetary systems

Figure 5.9 synthesizes two centuries of evidence on how global asymmetries in trade, finance, and income have been structured (see Nievas and Piketty (2025)). Taken together, its four panels reveal not just fluctuations in balances but enduring patterns of power and privilege in the international financial system.

Panel (a) traces net foreign income balances. It highlights Europe’s remarkable capacity in the 19th century to enjoy positive income flows despite persistent trade deficits. By the eve of World War I, these inflows amounted to about 1.5% of world GDP, an unprecedented record. Panels (b) and (c) explain how this was possible: Europe’s foreign assets, concentrated in colonies, peaked at nearly one-third of world GDP, allowing it to convert deficits in goods and services into surpluses in income.

A striking modern parallel emerges in North America & Oceania.  Panel (c) shows the region today holds large negative net foreign assets, while panel (d) confirms a persistent trade deficit. Yet panel (a) reveals that North America & Oceania still records positive net foreign income. The explanation lies in panel (b): excess yield. Like Europe in the colonial era, North America & Oceania, led by the United States, systematically earns higher returns on its assets abroad than it pays on its liabilities. This exorbitant privilege allows the region to live with persistent trade and net foreign asset deficits while continuing to obtain positive net income from the rest of the world.

East Asia, by contrast, follows a more “textbook” path. Its rising creditor position since the 1980s has been built on persistent surpluses in trade, not on privileged yields. This comparison underscores how structural asymmetries and unequal exchange differ in geography but not in essence: colonial Europe relied mainly on extraction and colonial rents; today’s North America & Oceania relies mainly on financial dominance and institutionalized excess yields.

This shows that global imbalances are not corrected by market forces. They are sustained by entrenched hierarchies of finance, trade, and monetary power. Addressing such asymmetries requires systemic reform. A meaningful reform of the global monetary and trade system will require a new mix of rules and institutions. Proposals in Nievas and Piketty (2025) include options such as pegged exchange rates closer to purchasing power parities, expanded use of special drawing rights (SDRs, an international reserve asset created by the International Monetary Fund (IMF)), creation of a global currency, centralized credit and debit systems, and even corrective taxes on excessive surpluses.

The underlying message is clear: global economic relations are shaped less by self-correcting markets than by persistent power asymmetries and structural imbalances. Without bold reforms, the skewed logic of “exorbitant privilege” will continue, locking the Global South into unequal exchange and constraining its development.

Main takeaways

This chapter has shown that what began as the United States’ “exorbitant privilege” has become a structural privilege of the rich world. Advanced economies borrow cheaply, lend profitably, and secure income inflows, while poorer countries face the opposite reality: costly liabilities, low-yield assets, and a persistent outflow of income. These patterns are not the result of market efficiency but of institutional design that places reserve currency issuers and financial centers at the core of the global system.

The evidence demonstrates that this privilege translates into a continuous transfer of resources from poorer to richer countries. Far from narrowing gaps, financial globalization has increased them. This amounts to a modern form of unequal exchange: colonial powers once relied on resource extraction to transform deficits into surpluses; today, advanced economies achieve the same through excess yields.

The burden falls on developing countries, reducing their capacity to invest in education, health, and infrastructure. By constraining human capital formation and fiscal space, the system limits their ability to reduce inequality across countries. Without structural reform, global inequality will persist.

Box 5.1: Exorbitant duty is not so exorbitant

The table illustrates the performance of different country groups during the 2008–2009 global financial crisis. At first glance, the “exorbitant duty” narrative suggests that the richest economies were among those who absorbed the heaviest losses as the cost of providing safe assets to the rest of the world. Yet the evidence tells a different story. The top 20% recorded only modest losses in 2008 (3% of GDP) and quickly recovered with gains in 2009, leaving them essentially unchanged by the crisis. By contrast, the middle 40% of countries faced large and persistent losses in both years, making them the true losers.

This evidence challenges the idea of a heavy “insurance burden” carried by the global rich. Their resilience stems from structural privilege: higher returns, safer liabilities, and the ability to bounce back swiftly. The so-called duty is episodic and modest, while the exorbitant privilege is enduring.

¹ BRICS is an acronym referring to a group of major emerging economies: Brazil, Russia, India, China, and South Africa.

Despite major social and economic transformations over the past two centuries, gender inequality remains a defining feature of the global economy. Women today are more educated, more active in the labor market, and more visible in positions of leadership than ever before. Yet, when we examine how work hours and income are divided between men and women, a striking reality emerges: the world is still a long way from achieving gender parity.

At the global level, women contribute significantly to both paid and unpaid work, but their economic rewards remain much smaller. They are more likely to work longer hours when both market and household labor are counted, yet they earn less, own less, and occupy fewer formal jobs. Across every region, women’s shares of labor income lag behind men’s, and progress in narrowing these gaps has been slow. Even where gains have been made in education or employment participation, they have not translated into equal pay or equal access to opportunities.

Figure 4.1 helps place this imbalance in perspective. It shows that women still suffer gender inequalities across several key dimensions. Women contribute a majority of total working hours worldwide, once unpaid domestic work is included, yet they only earn around one-third of aggregated labor income. Focusing on economic work, employment rates lag significantly behind those of men, with women much less likely to hold a paid job, and when employed, they earn substantially less per hour. Even in education, where female high school enrollment has increased dramatically, parity has not been fully achieved at the global level. These figures reveal not only that gender inequality persists, but that its scope should be apprehended in all its complexity by studying its social, educational, and economic dimensions. Gender inequality is persistent and structural, not just a declining historical feature of the global economy.

Humanity works fewer hours, but the benefits are unequal across genders

One of the most striking long-run transformations in the global economy is the decline in working hours. Two centuries ago, the typical worker spent more than sixty hours per week in market employment. Today, average hours have fallen dramatically, with all regions working around thirty to forty-five hours per week. This reduction reflects profound structural changes: industrialization, rising productivity (right-hand panel of Figure 4.2), the spread of labor rights and collective action, as well as, in some contexts, institutional change and deliberate policies aimed at shortening the working week. As the left-hand panel of Figure 4.2 illustrates, Europe today records the lowest average hours worldwide, often below thirty per week, while South & Southeast Asia remain closer to forty-five. The overall picture is one of a world population that, on average, spends less time in formal work than in the past.

Yet this aggregate progress conceals persistent gender divides. Figure 4.3 highlights that women continue to work longer hours overall than men once unpaid domestic labor is included. Across the world, women devote more hours to household responsibilities. These hours are rarely compensated or formally recognized, but they represent a substantial portion of total labor time and contribute directly to social welfare. The result is a paradox: men appear to work longer when only market hours are considered, but women consistently surpass them in total working hours once unpaid activities are taken into account.

This imbalance carries deep implications. First, it can limit women’s opportunities in the labor market, as time spent on unpaid work constrains the hours available for paid work, training, or career advancement . This, together with fewer paid jobs available for women, gender discrimination, and cultural norms, increases gender inequality. Second, it reinforces the wage gap:  women not only work more hours in total, but they also earn less for the paid portion of their labor. Ultimately, it highlights how gender inequality extends beyond wages and employment statistics to the organization of daily life. Working time itself is unequally distributed, with women bearing the heavier load. Their labor is rendered invisible by the non-inclusion of domestic and care work in national accounts.

The long-run decline in global working hours is therefore a story of uneven gains. Humanity may be working fewer hours overall, but men have benefited most from the reductions  in  formal  work,  while women’s total workload remains high. This uneven distribution of time is one of the clearest demonstrations that progress in labor conditions has not automatically translated into gender parity.

Female labor income shares remain well below equality

If hours worked reveal one dimension of inequality, labor income shares provide another. They show how much of the total earnings generated by labor in a country or region go to women, and how this share has changed over time. Figure 4.4 and Figure 4.5 make clear that, despite progress, women remain far from achieving parity in all regions of the world.

In some regions, there have been improvements, but female labor income shares remain well below equality (see Figure 4.4). No region in the world has reached a 50–50 balance between men and women, and the gaps are especially pronounced in South Asia, the Middle East, and parts of Africa, where women capture less than a quarter of all labor income (see Figure 4.5).

Globally, women earn just about one-third of total labor income today. By contrast, Europe, North America & Oceania, and Russia & Central Asia record the highest female labor income shares, reaching around 40%, but this is still lower than the perfect parity case, which would mean a labor income share of 50%. These regions have seen sustained improvements, driven by higher female participation in the labor market, stronger legal protections, and expanding welfare systems. Figure 4.4 and Figure 4.5 show that the gender gap in labor income is both large and persistent. Women’s income share has risen, but only slowly. Gender inequality in labor earnings remains a structural feature of the global economy.

Women work more hours everywhere. The gender gap is larger than we previously thought

If women’s share of labor income is persistently lower, one might assume that they also work fewer hours. The opposite is true. Figure 4.6 and Figure 4.7 reveal that women, on average, work more hours than men worldwide once unpaid domestic work is included. The gender gap in total working time is not only substantial but also larger than what conventional measures have long suggested.

Traditional labor statistics have tended to focus narrowly on hours of paid work, thereby underestimating women’s contributions. When only market work is counted, men often appear to work longer, particularly in regions with high levels of formal male employment. But when unpaid household activities are properly measured, the picture changes radically: women consistently outwork men in total hours. This reality has been documented by recent research¹.

Figure 4.6 illustrates this at the European level, providing a clear example of how the calculation works. It compares women’s share of working time when only paid labor is considered (the conventional measure) with their share once unpaid domestic and care work is included (the real measure). The gap widens substantially (from 8% to 43%) when all forms of labor are accounted for, revealing how much conventional statistics underestimate women’s contributions.

Figure 4.7 extends this comparison to the global scale. Instead of focusing on global averages, the regional decomposition contrasts the conventional and real gender gaps across major world regions today. The results are striking: in every region, the inclusion of domestic work significantly raises women’s share of total labor time, but also highlights that women systematically work more than men everywhere. This regional comparison shows that the underestimation of women’s work is not limited to Europe. Its historical evolution has led to different regional trends and different amplitudes of the gender gap. However, the gender gap in labor income is an undeniable global phenomenon that persists in the present.

Women are employed less than men

Beyond differences in hours worked, a fundamental gap remains in access to employment itself. Figure 4.8 shows that, across all world regions, women are less likely than men to hold a job in the labor market. While patterns vary across regions, the global pattern is clear: women’s employment rates trail men’s by a wide margin.

The employment gap is particularly large in South & Southeast Asia and the Middle East & North Africa. In these regions, around one in three women of working age are employed in the economic market, compared with more than two-thirds of men. By contrast, Europe, Russia & Central Asia, and North America & Oceania display higher female employment rates, yet even here the gap is significant.

This divide cannot be explained by individual choice alone. Structural barriers play a central role. Access to affordable childcare, transportation, and family leave policies strongly influence women’s ability to enter and remain in the labor force. In countries where such support is weak, women are more likely to withdraw from paid employment, especially after childbirth. Discrimination in hiring and promotion also reduces opportunities, particularly in higher-paying sectors.

The persistence of employment gaps has ripple effects across the economy. Lower female participation reduces women’s labor income shares (as seen in Figure 4.4 and Figure 4.5) and constrains overall economic potential. Studies consistently show that economies with higher female labor force participation experience stronger growth and a more equitable distribution of income. Yet, despite these benefits, progress has been slow and uneven, suggesting that employment inequalities are deeply embedded in economic and social structures.

Employed women earn less than employed men

Even when women overcome barriers to employment, they face another persistent challenge: lower pay. Figure 4.9 highlights the global gender pay gap, showing that employed women consistently earn less than employed men across all regions. This gap exists at every income level, in both high and low-income regions, with a few gains during recent decades in Latin America, North America & Oceania, Europe, and Russia & Central Asia.

The gap is still present despite decades of anti-discrimination laws and advocacy. The magnitude varies by region: the gap is widest in Sub-Saharan Africa and South & Southeast Asia. Employed women earn about 75% of what employed men earn in North America & Oceania, Europe, Russia & Central Asia, and East Asia. The persistence of this divide underscores that it is not simply a legacy of the past, but a structural feature of contemporary labor markets.

Several factors contribute to the wage gap.     Occupational segregation plays a major role: women are overrepresented in sectors that pay less, such as education, healthcare, and domestic services, and underrepresented in higher-paying fields like finance, engineering, and technology. Within firms, women are less likely to occupy senior positions and more likely to be hired in part-time or precarious roles, which reduces average earnings. The economic consequences are far-reaching. Lower pay compounds over time, leading to smaller savings, weaker pensions, and reduced wealth accumulation. Women not only earn less during their working years but can also accumulate lower wealth, reinforcing inequalities across generations. The gender pay gap is, therefore, more than a matter of fairness in wages. It reflects how societies value different kinds of work and how power is distributed in the labor market.

The role of education in improving the gender gap

Education is often viewed as the most powerful equalizer. Expanding access to schooling has indeed transformed women’s lives worldwide, enabling them to enter the labor market in greater numbers and to aspire to careers that were once out of reach. Yet Figure 4.10 and Figure 4.11 reveal that while education has narrowed some gender divides, it has not been sufficient to eliminate them.

Figure 4.10 shows that women’s educational participation has improved dramatically in this century. In low- and middle-income economies, the school enrollment gender gap has decreased in the last twenty-five years from 85% to 98%, reaching almost full parity. In high-income countries, young women now outnumber men in secondary education enrollment. These advances have been crucial in raising female employment and income levels, as education increases opportunities to access formal jobs and higher wages.

However, Figure 4.11 reminds us that education alone cannot fully close the gap. Even when women achieve the same or higher levels of schooling and income returns on schooling, their labor income share remains lower than men’s. The link between education and equality is therefore partial and mediated by broader labor market structures. High levels of female education have not translated into equal employment or pay, due to persistent cultural and institutional barriers.

The lesson is clear. Education is necessary for gender equality but not sufficient on its own. Without policies that address workplace discrimination, provide childcare support, and promote equal opportunities, the returns on education for women will remain systematically lower than for men.

Main takeaways

Gender inequality remains a defining and persistent feature of the global economy. Women today are more educated, more active in the labor market, and more present in leadership positions, yet their economic standing continues to lag behind men’s.

Women work longer hours than men once unpaid domestic and care work is included, but they capture only about one-third of total labor income. This paradox reflects how aggregate progress has been unevenly distributed. Employment and pay gaps reinforce this imbalance. Women are less likely to hold paid jobs in every region, and when employed, they consistently earn less than men. This has long-term effects on savings, pensions, and wealth accumulation, increasing inequality.

Education has narrowed some gaps, with women achieving near parity in high-school enrollment, but schooling alone has not eliminated inequalities. Historical evidence shows that progress is slow and uneven. The lesson is clear: gender parity is by no means a guaranteed result of narrowing gender inequality. For genuine gender parity to be achieved requires sustained institutional change, supportive policies, and recognition of the invisible labor that women continue to perform disproportionately to men.

¹ See Andreescu et al. (2025).

The aim of the World Inequality Report 2026 is to present the latest and most comprehensive data on inequality in order to inform democratic debate worldwide. It updates the 2022 and 2018 editions, expanding both the temporal and thematic scope of our research. In addition to long-run series regarding income and wealth, this report deepens our analysis of redistribution, gender gaps, political divides, and the international financial system. It also advances our work on global tax justice, with new evidence on how progressive taxation could mobilize substantial resources to finance education, health, and climate adaptation.

Economic inequality has always been at the center of debates about how societies should be organized. The aftermath of the COVID-19 pandemic, the rise of armed conflicts, the acceleration of climate change, and the extreme polarization of democracies make these debates even more urgent. How should the incomes and wealth produced by our economies be distributed across populations and across the globe? Are today’s fiscal systems adequate to meet collective needs? Are the poorest countries catching up with richer ones? Are women and marginalized groups acquiring equal access to opportunities? On these questions, people across the world hold strong and often contradictory views about what constitutes acceptable inequality and what should be done about it.

Our objective is not to claim that a single “ideal” level of inequality exists, nor to prescribe a single institutional model. Ultimately, such decisions can only be made through public deliberation and political institutions. Our more modest goal is to provide a common basis of facts. We hope to contribute to a shared understanding of how inequality has evolved, who benefits and who is left behind, and what policy tools are available to reduce the gaps.

The World Inequality Database (wid.world) remains central to this endeavor. Built over two decades of collaborative research involving more than two hundred scholars worldwide, wid.world provides open access to the most extensive data on the historical evolution of income and wealth distribution. By linking fiscal records, household surveys, national accounts, and new data on gender, elections, and global finance, it becomes possible to track several dimensions of inequality across countries, regions, and socioeconomic groups with an unprecedented level of detail.

Beyond wid.world, the World Inequality Lab (WIL) has also developed a range of complementary tools to broaden access to inequality data and strengthen democratic debate. These include new thematic databases such as the World Political Cleavages and Inequality Database (wpid.world), the World Historical Balance of Payments Database (wbop.world), the World Human Capital Expenditure Database (whce.world), and the Distribuciones website for Latin America (distribuciones.info), alongside updated methodological guidelines for Distributional National Accounts Guidelines (DINA Guidelines). The WIL has also produced the Climate Inequality Report 2025 and launched interactive platforms like the Global Wealth Tax Simulator, which allow policymakers, journalists, and citizens to visualize how progressive taxation could mobilize resources for collective goods. Looking ahead, the Global Justice Project will expand this effort by combining data on inequality, the environment, and social issues to envision fair and sustainable pathways for the 21st century. It will include a Global Justice Fund proposal with expenditure objectives to reduce inequality. Together, these tools reflect our commitment not only to documenting inequality but also to making data transparent, accessible, and usable by a wide audience.

In parallel with these initiatives, the global architecture for inequality monitoring is entering a new phase. The release of the G20 Extraordinary Committee of Independent Experts Report on Global Inequality, led by Joseph E. Stiglitz, and joined by Adriana Abdenur, Winnie Byanyima, Jayati Ghosh, Imraan Valodia and Wanga Zembe-Mkabile, has put forward a landmark proposal to establish an International Panel on Inequality (IPI). The World Inequality Lab warmly welcomes this recommendation. The extreme concentration of wealth and power documented in both this report and ours underscores the need for an independent global body capable of systematically tracking inequality trends and evaluating the distributional impact of major policy choices. This work builds on, and can substantially scale up, the efforts we have developed for more than a decade through the World Inequality Database and our network of researchers worldwide. The World Inequality Lab stands ready to contribute its data, methods, and expertise to this emerging international architecture, which represents a historic opportunity to place tax justice, social justice, and inequality at the heart of global governance.

This World Inequality Report 2026 offers new findings in five main areas:

First, we provide updated and extended evidence on the scale and structure of global inequality. We show that income and wealth have reached historic highs but remain very unevenly distributed.  For instance, the top 0.001%—fewer than 60,000 individuals—owns three times more wealth than the entire bottom half of humanity combined. This imbalance is compounded by regional disparities, as South & Southeast Asia and Sub-Saharan Africa lag far behind North America & Oceania and Europe. Within almost every region, the top 1% alone hold more wealth than the bottom 90% combined.

Second, the report updates our worldwide systematic measure of gender inequality, specifically female labor income shares, and provides a new methodology for measuring gender inequality that accounts for unpaid labor hours. Women still earn only around 30% of total global labor income, and in every region, they work more hours than men when unpaid labor is accounted for. The gender pay gap persists across all regions and is larger when unpaid labor hours are accounted for.

Third, we present new evidence on the structural privilege of the rich world in the international financial system. What was once described as the “exorbitant privilege” of the United States—borrowing cheaply thanks to the dollar’s reserve-currency role while investing abroad at higher returns—has expanded into a systemic advantage enjoyed by advanced economies as a group. These countries consistently record positive income inflows coming from poorer nations. This is not the product of market efficiency but of institutional design, rooted in currency dominance, portfolio asymmetries, and global financial rules that allow rich countries to operate as financial rentiers. The result is a modern form of unequal exchange: poorer nations transfer large shares of their GDP each year to wealthier ones, shrinking their  fiscal  capacity  and  limiting their ability to invest in essential services such as education, health, and infrastructure. Rather than correcting global imbalances, today’s international financial system entrenches them, locking developing countries into structural disadvantage.

Fourth, we analyze the role of progressive taxation and redistributive policies in reducing inequality. Taxes and transfers are among the most powerful tools societies have to finance public goods and reduce inequality. Progressive taxation also strengthens social cohesion and limits the political influence of extreme wealth. Yet evidence shows that tax progressivity collapses at the very top: centi-millionaires and billionaires often pay proportionally less tax than most of the population, undermining both fiscal capacity and trust.

Fifth, we analyze how inequality reshapes political cleavages and democratic representation. Evidence in this report shows that working-class representation in parliaments has long been low and has declined further in recent decades, narrowing the space for redistributive politics. In Western democracies, income and education political divides have disconnected, producing “multi-elite” party systems in which highly educated voters lean left and high-income voters remain aligned with the right. This fragmentation has weakened broad coalitions for redistribution. Geography has also re-emerged as a central divide, with rural and urban voters increasingly polarized, further fragmenting the working majority. More ambitious and inclusive policy platforms appear to be needed so as to rebuild the redistributive coalitions of the past.

This report also explores solutions. Evidence shows that inequality can be reduced through progressive taxation, redistributive transfers, investment in human capital, recognition of unpaid work, and reforms to global finance. For instance, even a moderate 3% global tax on fewer than 100,000 centi-millionaires and billionaires alone would raise over $750 billion annually, a figure comparable to total education budgets in low- and middle-income countries. Such proposals for global tax justice demonstrate that significant revenues could be mobilized from a tiny fraction of the population, while reinforcing fairness and restoring the legitimacy of fiscal systems.

We are acutely aware, however, of the limitations of our knowledge. Despite significant progress, many countries still fail to publish reliable income and wealth data. Some of the largest economies continue to withhold tax statistics, limiting transparency and informed debate. As in previous editions, we call on governments and international organizations to release more raw data on income, wealth, and taxation. The lack of transparency is not a technical issue alone; it undermines the very possibility of democratic deliberation about inequality and its remedies.

By providing detailed documentation of our data and methods we hope to fulfill our single most important objective: to enable interested citizens to make informed judgments about the inequalities that affect them in their everyday lives. Economic issues do not belong only to economists, policymakers, or business leaders. They belong to everyone. Our objective is to contribute to the power of the many by equipping societies with the facts needed to engage in informed, democratic debate about one of the most pressing issues of our time: inequality.

Highlights from the World Inequality Report 2026 (WIR 2026)

The World Inequality Report 2026 (WIR 2026) marks the third edition in this flagship series, following the 2018 and 2022 editions. These reports draw from the work of over 200 scholars from all over the world, affiliated with the World Inequality Lab and contributing to the largest database on the historical evolution of global inequality. This collective endeavor represents a significant contribution to global discussions on inequality. The team has helped reshape how policymakers, scholars, and citizens understand the scale and causes of inequality, foregrounding the separatism of the global rich and the urgent need for top-end tax justice. Their findings have informed national and international debates on fiscal reform, wealth taxation, and redistribution in forums from national parliaments to the G20.

Building on that foundation, WIR 2026 expands the horizon. It explores new dimensions of inequality that define the 21st century: climate and wealth, gender disparities, unequal access to human capital, the asymmetries of the global financial system, and the territorial divides that are redrawing democratic politics. Together, these themes reveal that inequality today is not confined to income or wealth; it affects every domain of economic and social life.

The global inequality in access to human capital remains enormous today, likely a much wider gap than most people would imagine. Average education spending per child in Sub Saharan Africa stood at around just €200 (purchasing power parity, PPP), compared with €7,400 in Europe and €9,000 in North America & Oceania: a gap of more than 1 to 40, i.e., approximately three times as much as the gap in per capita GDP. Such disparities shape life chances across generations, entrenching a geography of opportunity that exacerbates and perpetuates global wealth hierarchies.

The report also shows that contributions to climate change are far from evenly distributed. While public debate often focuses on emissions associated with consumption, new studies have revealed how capital ownership¹ plays a critical role in the inequality of emissions. The global wealthiest 10% of individuals account for 77% of global emissions associated with private capital ownership, underscoring how the climate crisis is inseparable from the concentration of wealth. Addressing it requires a targeted realignment of the financial and investment structures that fuel both emissions and inequality.

Gender inequality also looks starkly different if we take into account invisible, unpaid labor, which is disproportionately undertaken by women. When unpaid domestic and care labor is included, the gap widens sharply. On average, women earn only 32% of what men earn per working hour, accounting for both paid and unpaid activities; compared to 61% when not accounting for unpaid domestic labor. These findings reveal not only persistent discrimination but also deep inefficiencies in how societies value and allocate labor.

At the international level, WIR 2026 documents how the global financial system reinforces inequality. Wealthy economies continue to benefit from an “exorbitant privilege”: each year, around 1% of global GDP (approximately three times as much as development aid) flows from poorer to richer nations through net foreign income transfers associated with persistent excess yields and lower interest payments on rich-country liabilities. Reversing this dynamic is central to any credible strategy for global equity.

Finally, the report highlights the rise of territorial divides within countries. In many advanced democracies, gaps in political affiliations between large metropolitan centers and smaller towns have reached levels unseen in a century. Unequal access to public services, job opportunities, and exposure to trade shocks has fractured social cohesion and weakened the coalitions necessary for redistributive reform.

Besides a wealth of novel data, WIR 2026 provides a framework for understanding how economic, environmental, and political inequalities intersect. It calls for renewed global cooperation to tackle these divides at their roots: through progressive taxation, investment in human capabilities, climate accountability tied to private capital ownership, and inclusive political institutions capable of rebuilding trust and solidarity.

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Inequality has long been a defining feature of the global economy, but by 2025, it has reached levels that demand urgent attention. The benefits of globalization and economic growth have flowed disproportionately to a small minority, while much of the world’s population still face difficulties in achieving stable livelihoods. These divides are not inevitable. They are the outcome of political and institutional choices.

This report draws on the World Inequality Database and new research to provide a comprehensive picture of inequality across income, wealth, gender, international finance, climate responsibility, taxation, and politics².

The findings are clear: inequality remains extreme and persistent; it manifests across multiple dimensions that intersect and reinforce one another; and it reshapes democracies, fragmenting coalitions and eroding political consensus. Yet the data also demonstrate that inequality can be reduced. Policies such as redistributive transfers, progressive taxation, investment in human capital, and stronger labor rights have made a difference in some contexts. Proposals such as minimum wealth taxes on multi-millionaires illustrate the scale of resources that could be mobilized to finance education, health, and climate adaptation. Reducing inequality is not only about fairness but also essential for the resilience of economies, the stability of democracies, and the viability of our planet.

The world is extremely unequal

The first and most striking fact emerging from the data is that inequality remains at very high levels. Figure 1 illustrates that, today, the top 10% of the global population’s income-earners earn more than the remaining 90%, while the poorest half of the global population captures less than 10% of the total global income. Wealth is even more concentrated: the top 10% own three-quarters of global wealth, while the bottom half holds only 2%.

The picture becomes even more extreme when we move beyond the top 10%. Figure 2 illustrates that the wealthiest 0.001% alone, fewer than 60,000 multi-millionaires, control today three times more wealth than half of humanity combined. Their share has grown steadily from almost 4% in 1995 to over 6% today, which underscores the persistence of inequality.

This concentration is not only persistent, but it is also accelerating. Figure 3 shows that extreme wealth inequality is rapidly increasing. Since the 1990s, the wealth of billionaires and centi-millionaires has grown at approximately 8% annually, nearly twice the rate of growth experienced by the bottom half of the population. The poorest have made modest gains, but these are overshadowed by the extraordinary accumulation at the very top.

The result is a world in which a tiny minority commands unprecedented financial power, while billions remain excluded from even basic economic stability.

Inequality and climate change

The climate crisis is a collective challenge but also a profoundly unequal one. Figure 4 shows that the poorest half of the global population accounts for only 3% of carbon emissions associated with private capital ownership, while the top 10% account for 77% of emissions. The wealthiest 1% alone account for 41% of private capital ownership emissions, almost double the amount of the entire bottom 90% combined.

This disparity is about vulnerability. Those who emit the least, largely populations in low-income countries, are also those most exposed to climate shocks. Meanwhile, those who emit the most are better insulated, with resources to adapt to or avoid the consequences of climate change. This unequal responsibility is therefore also an unequal distribution of risk. Climate inequality is both an environmental and a social crisis.

Gender inequality

Inequality is not only a question of income, wealth, or emissions. It is also embedded in the structures of everyday life, shaping whose work is recognized, whose contributions are rewarded, and whose opportunities are constrained. Among the most persistent and pervasive divides is the gap between men and women.

Globally, women capture just over a quarter of total labor income, a share that has barely shifted since 1990. When analyzed by regions (Figure 5), in the Middle East & North Africa, women’s share is only 16%; in South & Southeast Asia it is 20%; in Sub-Saharan Africa, 28%; and in East Asia, 34%. Europe, North America & Oceania, as well as Russia & Central Asia, perform better, but women still capture only about 40% of labor income.

Women continue to work more and earn less than men. Figure 6 shows that women work more hours than men, on average 53 hours per week compared to 43 for men, once domestic and care work is taken into account. Yet their work is consistently valued less. Excluding unpaid work, women earn only 61% of men’s hourly income; when unpaid labor is included, this figure falls to just 32%. These disproportionate responsibilities restrict women’s career opportunities, limit political participation, and slow wealth accumulation. Gender inequality  is  therefore  not  only a question of fairness but also a structural inefficiency: economies that undervalue half of their population’s labor undermine their own capacity for growth and resilience.

Inequality between regions

The global averages conceal enormous divides between regions. Figure 7 shows that the world is split into clear income tiers: high-income regions such as North America & Oceania and Europe; middle-income groups including Russia & Central Asia, East Asia, and the Middle East & North Africa; and very populous regions where average incomes remain low, such as Latin America, South & Southeast Asia, and Sub-Saharan Africa.

The contrasts are stark, even when correcting for price differences across regions. An average person in North America & Oceania earns about thirteen times more than someone in Sub-Saharan Africa and three times more than the global average. Put differently, average daily income in North America & Oceania is about €125, compared to only €10 in Sub-Saharan Africa. And these are averages: within each region, many people live with far less.

Figure 8 highlights this point by showing the distribution of income and wealth within regions. Income is distributed unequally everywhere, with the top 10% consistently capturing far more than the bottom 50%. But when it comes to wealth, the concentration is even more extreme. Across all regions, the wealthiest 10% control well over half of total wealth, often leaving the bottom half with only a tiny fraction.

Inequality is enormous both across regions and within them. Some regions, like North America & Oceania, enjoy higher average income and wealth than the world average, yet still exhibit large internal disparities. Others, like Sub-Saharan Africa, face the double burden of low average levels and extreme internal inequality.

A distinctive strength of the World Inequality Database (wid.world) is its ability to track income and wealth across the entire distribution, from the poorest individuals to the very richest, while also providing information at the country level for several years. This makes it possible to examine inequality not only between and across regions, but also within and across individual countries.

Figure 9 illustrates this with the Top 10%/Bottom 50% (T10/B50) income ratio, a straightforward yet powerful measure that asks: On average, how many times more does the top 10% earn compared to the poorest half? The answer reveals large inequalities within countries.

While inequality within countries is severe everywhere, its intensity follows clear patterns. Europe and much of North America & Oceania are among the least unequal, though even here, the top groups capture far more wealth than the bottom half. The United States stands out as an exception, with higher levels of inequality than its high-income peers. At the other end of the spectrum, Latin America, southern Africa, and the Middle East & North Africa combine low incomes for the bottom 50% with extreme concentration at the top, which yields some of the highest T10/B50 income gaps worldwide.

Redistribution, taxation, and evasion

Studying inequality across countries and over time reveals that policy can indeed reduce inequality. Figure 10 shows how progressive taxation and, especially, redistributive transfers have significantly reduced inequality in every region, particularly when systems are well designed and consistently applied. In Europe and North America & Oceania, tax-and-transfer systems consistently cut income gaps by more than 30%. Even in Latin America, redistributive policies introduced after the 1990s have made large progress in narrowing gaps. The evidence shows that in every region, redistributive policies have been effective in reducing inequality, but with large variations.

The global inequality in access to human capital remains enormous: it stands at levels that are arguably much larger than most people imagine. In 2025, average education spending per child in Sub-Saharan Africa stood at just €220 (PPP), compared with €7,430 in Europe and €9,020 in North America & Oceania (see Figure 11) (a gap of more than 1 to 40, i.e., approximately three times as much as the gap in per capita GDP or net national income-NNI-). Such disparities shape life chances across generations, entrenching a geography of opportunity that exacerbates and perpetuates global wealth hierarchies.

In addition, taxation often fails where it is most needed: at the very top of the distribution.  Figure 12 reveals how the ultra-rich escape taxation.  Effective income tax rates climb steadily for most of the population but fall sharply for billionaires and centi-millionaires. These elites pay proportionally less than most of the households that earn much lower incomes. This regressive pattern deprives states of resources for essential investments in education, healthcare, and climate action. It also undermines fairness and social cohesion by decreasing trust in the tax system. Progressive taxation is therefore crucial: it not only mobilizes revenues to finance public goods and reduce inequality, but also strengthens the legitimacy of fiscal systems by ensuring that those with the greatest means contribute their fair share.

Inequality due to the global financial system

Inequality is also deeply embedded in the global financial system. Figure 13 illustrates how the current international financial architecture is structured in ways that systematically generate inequality. Countries that issue reserve currencies can persistently borrow at lower costs, lend at higher rates, and attract global savings. By contrast, developing countries face the mirror image: expensive debts, low-yield assets, and a continuous outflow of income.

Persistent demand for “safe” assets such as U.S. Treasuries and European sovereign bonds, reinforced by central bank reserves, regulatory standards (i.e., Basel III), and the judgments of credit rating agencies, locks in this advantage (see Figure 14). The result is that rich countries consistently borrow more cheaply while investing in higher-yielding assets abroad, positioning themselves as financial rentiers at the expense of poorer nations.

The outcome is a modern form of structurally unequal exchange. While colonial powers once extracted resources to transform deficits into surpluses, today’s advanced economies achieve similar results through the financial system. Developing countries are driven to transfer resources outward, constrained in their ability to invest in education, healthcare, and infrastructure. This dynamic not only entrenches global inequality but also increases inequality within nations, as fiscal space for inclusive development is eroded.

Political cleavages and democracy

Economic divides do not stop at the marketplace; they spill directly into politics. Inequality shapes who is represented, whose voices carry weight, and how coalitions are built, or fail to be built. Figure 15 shows how the traditional class-based alignment of politics in Western democracies has broken down³. In the mid-20th century, lower-income and less educated voters largely supported left-wing parties, while wealthier and more educated groups leaned right, creating a clear class divide and rising redistribution.

Today, that pattern has fractured. First, education and income now point in different directions (see Figure 15), making broad coalitions for redistribution far harder to sustain. This evolution can be accounted for by the fact that educational expansion has come with a complexification of the class structure. For example, many high-degree but relatively low-income voters (e.g., teachers or nurses) currently vote for the left, while many voters with lower degrees but relatively higher income (e.g., self-employed or truck drivers) tend to vote for the right.

The even more striking evolution is the rise of territorial divides within countries. In many advanced democracies, gaps in political affiliations between large metropolitan centers and smaller towns have reached levels unseen in a century (see Figure 16). Unequal access to public services (education, health, transportation and  other  infrastructures),   job opportunities, and exposure to trade shocks has fractured social cohesion and weakened the coalitions necessary for redistributive reform. As a consequence, working-class voters are now fragmented across parties on both sides of the aisle or left without strong representation, which limits their political influence and entrenches inequality.  In order to reactivate the redistributive coalitions of the postwar era, it is critical to design more ambitious policy platforms benefiting all territories, as they successfully did in the past.

This fragmentation erodes the political foundations needed to tackle inequality and prevents the implementation of redistributive policies. Meanwhile, the influence of wealth in politics compounds the inequality in political influence. Figure 17 shows how campaign financing is heavily concentrated among  the top earners:  in  France and South Korea, the richest 10% of citizens disproportionately provide the majority of political donations. This concentration of financial power amplifies elite voices, narrows the space for equitable policymaking, and further marginalizes the working majority.

Reducing inequality is a political choice. But fragmented electorates, underrepresentation of workers, and the outsized influence of wealth all work against the coalitions needed for reform. This reality can change. It reflects political choices about campaign finance rules, party strategies, and institutional design that can be reshaped with sufficient will. Building the conditions for consensus is therefore as central to reducing inequality as any specific policy instrument.

Policy directions

The evidence makes one conclusion clear: inequality can be reduced. There are a range of policies that, in different ways, have proven effective in narrowing gaps.

One important avenue is through public investments in education and health.  These are among the most powerful equalizers, yet access to these basic services remains uneven and stratified. Public investment in free, high-quality schools, universal healthcare, childcare, and nutrition programs can reduce early-life disparities and foster lifelong learning opportunities. By ensuring that talent and effort, rather than background, determine life chances, such investments build more inclusive and resilient societies.

Another   path   is   through redistributive programs. Cash transfers, pensions, unemployment benefits, and targeted support for vulnerable households can directly shift resources from the top to the bottom of the distribution. Where well designed, such measures have narrowed income gaps, strengthened social cohesion, and provided buffers against shocks, especially in regions with weaker welfare states.

Progress can also come from advancing gender equality. Reducing gender gaps requires dismantling the structural barriers that shape how work is valued and distributed. Policies that recognize and redistribute unpaid care work, through affordable childcare, parental leave that includes fathers, and pension credits for caregivers, are essential to leveling the playing field. Equally important are the strict enforcement of equal pay and stronger protections against workplace discrimination. Addressing these imbalances ensures that opportunities and rewards are not determined by gender but by contribution and capability. Climate policy offers another key dimension: when poorly designed, it can enhance inequality, but well planned, it can also reduce it. Climate subsidies coupled with progressive taxation have the potential to accelerate the adoption of low-carbon technologies in a fair way. Taxes and regulations on luxury consumption or high-carbon investments can also help reduce emissions levels among the wealthiest groups.

Tax policy is another powerful lever. Fairer tax systems, where those at the very top contribute at higher rates through progressive taxes, not only mobilize resources but also strengthen fiscal legitimacy. Even modest rates of a global minimum tax on billionaires and centi-millionaires could raise between 0.45% and 1.11% of global GDP (see Figure 18) and could finance transformative investments in education, healthcare, and climate adaptation.

Inequality can also be reduced by reforming the global financial system. Current arrangements allow advanced economies to borrow cheaply and secure steady inflows, while developing economies face costly liabilities and persistent outflows. Reforms such as adopting a global currency, centralized credit and debit systems, and corrective taxes on excessive surpluses would expand fiscal space for social investment and reduce the unequal exchange that has long defined global finance.

Conclusion

Inequality is a political choice. It is the result of our policies, institutions, and governance structures. The costs of escalating inequality are clear: widening divides, fragile democracies, and a climate crisis borne most heavily by those least responsible. But the possibilities of reform are equally clear. Where redistribution is strong, taxation is fair, and social investment is prioritized, inequality narrows.

The tools exist. The challenge is political will. The choices we make in the coming years will determine whether the global economy continues down a path of extreme concentration or moves toward shared prosperity.

¹ Private capital ownership–based emissions refer to greenhouse gas emissions produced by firms and other productive assets that are privately owned. These emissions are allocated to individuals in proportion to their ownership shares and exclude direct household emissions and emissions from publicly owned assets (see Chancel and Mohren (2025)).

² See, for instance, Andreescu, Arias-Osorio, et al. (2025); Andreescu and Alice Sodano (2024); Arias-Osorio et al. (2025); Bharti and Mo (2024); Bauluz, Brassac, Clara Martínez-Toledano, Nievas, et al. (2025); Bauluz, Brassac, Clara Martínez-Toledano, Piketty, et al. (2024); Chancel, Flores, et al. (2025); Dietrich et al. (2025); El Hariri (2024); Flores and Zúñiga-Cordero (2024); Forward and Fisher-Post (2024); Gómez-Carrera, Moshrif, Nievas, and Piketty (2024); Gómez-Carrera, Moshrif, Nievas, Piketty, and Somanchi (2025); Loubes and Robilliard (2024); Nievas and Piketty (2025).

³ See also Gethin, Clara Martínez-Toledano, and Piketty (2021); Gethin, Clara Martínez-Toledano, and Piketty (2022); Gethin and Clara Martínez-Toledano (2025)

This chapter examines through a regional lens who owns the world’s wealth and how that ownership has changed in recent decades. It starts by analyzing how much wealth there is at the global and regional level, and how it is split between the public and private sectors. It then goes on to assess wealth inequality within regions and within countries.

As the world has grown wealthier, who has captured the associated benefits? The data show that wealth has grown faster than income. Wealth growth is being accumulated mainly in private hands and, in all regions, is distributed far more unequally than income (seen in Chapter 2). Compared to the 1990s, East Asia has now emerged as a major holder of the world’s assets, joining Europe and North America & Oceania.

Wealth inequality trends across regions

Global wealth has expanded dramatically over the past three decades, but the gains have not been evenly shared across regions (Figure 3.1). In absolute terms, all regions recorded significant increases in net national wealth between 1995 and 2025. Yet when viewed in relative terms, the map of global wealth has been redrawn.

The most notable transformation has occurred in East Asia. In 1995, the region accounted for roughly one-fifth of global wealth; by 2025, its share has risen to over one-third, making it the world’s largest wealth-holding region. This surge mirrors the rapid rise in incomes observed in Figure 2.1, but the scale of the shift in wealth is even greater. Over the entire 1995–2025 period, East Asia’s wealth grew by nearly 7% per year, more than double the growth rate of Europe and faster than the global average.

By contrast, Europe’s relative weight in the global distribution of wealth has declined sharply. In 1995, Europe held over one-quarter of global wealth, but by 2025, this share has fallen to 16%. The underlying reason is slower wealth accumulation: Europe’s wealth has grown at just above 3% annually since 1995, among the lowest regional rates. North America & Oceania, meanwhile, has broadly maintained its position, with annual wealth growth of about 4.3%, roughly in line with the global average (see Bauluz, Brassac, et al. (2025)).

Other regions have experienced smaller but notable changes. South & Southeast Asia recorded robust annual wealth growth of 6%, second only to East Asia, although its global share, around 13% in 2025, remains well below its significant share of

Other regions have experienced smaller but notable changes. South & Southeast Asia recorded robust annual wealth growth of 6%, second only to East Asia, although its global share, around 13% in 2025, remains well below its significant share of the world’s population (33%, see Figure 2.2). Latin America and Russia & Central Asia lagged behind, with wealth growth averaging below 3%, resulting in stagnating or declining global shares. By contrast, the Middle East & North Africa posted relatively dynamic growth (nearly 5% annually), overtaking Latin America in the mid-2010s. Sub-Saharan Africa, starting from a very low base, grew at about 4.7% annually, faster than Latin America, Russia & Central Asia, and even Europe, yet it still accounts for only around 2% of global wealth today.

The geography of global wealth growth has shifted decisively toward Asia, while Europe’s centrality has waned. The disparity between regional shares of population (seen in Figure 2.2) and wealth highlights the  enduring  concentration  of economic power: regions with smaller populations (North America & Oceania and Europe) still hold disproportionate shares of global wealth, while populous areas such as Sub-Saharan Africa remain marginalized in the global distribution.

We now turn to Figure 3.2, which traces the historical ratio of net national wealth to net national income from the mid-19th century to today, for which data exist and estimates have been produced. This measure shows how much wealth countries hold relative to their annual income, offering a long-run view of the balance between accumulated wealth and economic activity. At the start of the 20th century, wealth levels were exceptionally high in Europe . In France and the United Kingdom , national wealth exceeded seven times annual income,  with  Germany  somewhat lower. These peaks collapsed during World War I and fell further during World War II, leaving mid-century wealth ratios at historic lows. The wars illustrate how quickly accumulated wealth can be destroyed by large-scale shocks. Outside Europe, trajectories differed. The United States and India saw moderate increases during the interwar years, but both, like Europe, experienced declines during and after World War II.

From the postwar decades onward, most countries experienced renewed rises in wealth ratios. Japan stood out for its surge in the 1970s and 1980s, fueled by rapid industrialization and asset booms, though its trajectory stalled after the 1990s real estate crisis and only began to rebound modestly in the 2020s. The most striking recent change has been in China. Since the 1990s, and accelerating through the 2000s and 2010s, its wealth-to-income ratio has soared to around 900%, roughly nine times annual income, by the early 2020s. Despite a dip during the COVID-19 pandemic, China still records the highest ratio among major economies. The long-run picture is one of collapse and recovery: wealth-to-income ratios were destroyed by the wars of the 20th century for belligerent countries, but have rebounded sharply in recent decades.

Figure 3.3 looks at how the composition of wealth has evolved across regions since 1995. Wealth as a share of national income can be broken down into two components: domestic capital, which represents the stock of assets located within a country’s borders, and net foreign assets, which reflect the balance between what residents own abroad and what foreigners own domestically.

Across the globe, domestic capital accounts for the bulk of wealth, but net foreign assets highlight significant differences between regions. In North America & Oceania, for instance, wealth is largely domestically held, but foreign positions are negative, meaning that outsiders collectively own more assets within the region than residents hold abroad. East Asia presents the opposite picture: its positive foreign asset balance lifts total wealth above the value of domestic capital. This dynamic has reinforced East Asia’s rise as the world’s largest wealth-holding region, as already seen in Figure 3.1.

Other regions show more modest or contrasting patterns. The Middle East & North Africa also holds positive foreign assets, though on a smaller scale. By contrast, South & Southeast Asia, Latin America, and Sub-Saharan Africa generally record negative foreign assets balances, underscoring their reliance on external capital and the fact that part of their domestic wealth is owned by foreigners. In recent years, Europe has begun to resemble the East Asian case, with residents increasingly holding more assets abroad than foreigners own within Europe. Russia & Central Asia, meanwhile, has seen a similar movement toward a positive position.

The overall picture is twofold. First, domestic capital remains the foundation of national wealth everywhere. Second, although net foreign assets are relatively small in scale, they determine the highly embedded nature of global financial linkages. East Asia, Europe, and the Middle East & North Africa hold more assets abroad than foreigners own within their borders.  By contrast, a significant portion of the wealth in North America, Latin America, and Sub-Saharan Africa is effectively owned outside their borders. Global wealth is not only concentrated but also deeply interconnected across regions.

Figure 3.4 illustrates the evolution of net foreign wealth across regions, expressed both in relation to regional GDP (left) and global GDP (right). These balances reveal which regions act as global creditors and which as debtors. In the 19th and early 20th centuries, Europe held the largest foreign asset position in history, with net wealth abroad reaching over 70% of its GDP and close to one-third of world GDP before 1914. Much of this was built on colonial extraction and unequal exchange, as is mirrored by the heavily negative positions of South & Southeast Asia and Sub-Saharan Africa (see Nievas and Piketty 2025).

The two world wars, revolutions, and decolonization brought this dominance to an abrupt end, wiping out most of Europe’s external holdings.

The mid-20th century saw North America & Oceania briefly become the world’s leading creditors, peaking at around 8% of world GDP in the 1950s. But since the 1970s, the region has shifted into the largest net debtor, with balances now at 18% of world GDP.

The most dramatic contemporary transformation has been in East Asia. Since the 1970s, the region has become the largest creditor. Today, it holds about 12% of the world’s GDP. The Middle East & North Africa has also maintained a strong positive balance since the oil boom of the 1970s, while Europe has rebuilt modest surpluses in recent decades. By contrast, Latin America, Sub-Saharan Africa, and South & Southeast Asia remain consistent debtors, with foreigners owning more of their assets than their residents hold abroad.

Foreign asset positions show the persistent global asymmetries of the financial system: today, East Asia, the Middle East & North Africa, and Europe finance the rest of the world, while North America & Oceania and most of the Global South run chronic deficits. It is important to note, as Nievas and Piketty (2025) emphasize, that these historical imbalances reflect not just markets but also power relations and unequal exchange, a theme we revisit in Chapter 5.

Private wealth is rising while public wealth stagnates

Over the past thirty years, global wealth has risen faster than income, growing from just over 400% of world income in 1995 to more than 600% in 2025 (Figure 3.2). Yet this rise has been almost entirely concentrated in the private sector (see Bauluz, Brassac, et al. (2025)). Figure 3.5 shows that private wealth increased from about 350% to over 500% of world income, while public wealth stagnated at around 80–90%. In some regions, public wealth even turned negative, meaning that governments’ liabilities exceeded their assets. The slowdown during the COVID-19 pandemic briefly interrupted the upward trajectory, but the long-run trend remains clear: wealth growth has accumulated in private hands.

Figure 3.5 shows that East Asia and North America & Oceania now report the highest levels of private wealth, each above 600% of income by 2025 (left-hand-side panel). North America & Oceania’s trajectory, however, has been volatile: strong growth up to 2007, a sharp fall during the global financial crisis, recovery in the 2010s, and a renewed decline after COVID-19. Europe has followed a steadier path, but its private wealth also fell more sharply than the global average after 2020. South & Southeast Asia has steadily built up private wealth, ranking fourth globally, while the Middle East & North Africa overtook Russia & Central Asia during the 2010s. By contrast, Latin America and Sub-Saharan Africa remain far below the world average, reflecting weaker asset accumulation relative to income.

The picture of public wealth is even more striking (right-hand-side panel). East Asia stands out as the only region with substantial and rising public wealth, thanks to sustained public savings and significant state ownership of assets. The Middle East & North Africa, Sub-Saharan Africa, Latin America, and Russia & Central Asia maintain modestly positive levels, but these are well below those in East Asia. Europe and South & Southeast Asia hover close to zero, showing little capacity to build collective wealth. In North America & Oceania, public wealth is negative: governments owe more than they own, with rising public debts offsetting limited state assets.

Overall, the world has become wealthier, but the ownership of this wealth has shifted toward individuals and corporations.  Governments, by contrast, have seen their net position weaken, narrowing their fiscal capacity to invest in collective goods or respond to crises. This imbalance between expanding private fortunes and stagnant public reserves is now a defining feature of the global economy. This shift toward private balance sheets raises a second question: how are the flows of income divided between labor and capital? Figure 3.6 answers this.

Figure 3.6 tracks how the income flow is split between labor and capital since 1980. Globally, labor’s share falls from about 61% in 1980 to 53% in 2025, while capital’s share rises from 39% to 47%. This rebalancing toward capital income mirrors the wealth patterns in Figure 3.5 (more wealth overall, and most of it private)¹.

As for regional patterns, North America & Oceania and Europe retain comparatively higher labor shares (and lower capital shares) than other regions. The Middle East & North Africa region shows the lowest labor shares and the highest capital shares, patterns that Dietrich et al. (2025) link to sectoral structure and resource rents. East Asia combines rapid capital-deepening with still-elevated labor shares for much of the period, but its capital share has risen markedly as industrialization and asset expansion progressed. In Latin America, South & Southeast Asia, and Sub-Saharan Africa, labor shares are persistently lower and capital shares higher. These differences are not simply an artifact of sector mix but are likely to reflect higher returns to capital and weaker worker bargaining power in poorer regions (Dietrich et al. (2025)). As the capital share rises, asset owners receive a larger slice of income; higher savings and asset prices among this group compound into faster private-wealth growth (see Bauluz, Novokmet, and Schularick (2022); Piketty and Zucman (2014)).

The world distribution of wealth by region

Figure 3.7 plots the world distribution of per capita wealth in 2025 by stacking regional density curves. The vertical scale is such that the area of each colored wedge corresponds to the region’s share of the world’s adult population. Two features dominate. First, the global distribution is sharply skewed: a long right tail, populated mainly by Europe and North America & Oceania, extends well beyond €250,000 per adult into the million-plus range. Second, most adults worldwide are clustered far to the left of that tail, at low to lower-middle levels of wealth.

South & Southeast Asia contributes the single largest mass at the center-left of the distribution; its demographic weight largely sets the global peak. East Asia lies to the right of that peak and spreads across a wide band, reflecting decades of asset accumulation that now place a sizable share of adults in the upper-middle range (see Arias-Osorio et al. (2025)). Latin America and the Middle East & North Africa straddle the middle, with a much thinner presence in the global top. Sub-Saharan Africa is concentrated at the very low end, with minimal representation beyond the lower deciles. Europe and North America & Oceania are overrepresented at the top tail and dominate the highest wealth brackets.

Compared with the income distribution shown earlier in Figure 2.5, the contrast is clear: wealth inequality is larger than income inequality. Regions that account for a substantial share of middle-income earners, such as East Asia and parts of South & Southeast Asia, remain underrepresented at the very top of the wealth distribution, while Europe and North America & Oceania are disproportionately present there. Put differently, location still shapes an individual’s chances of reaching the top of the global wealth ladder.

Figure 3.8 disaggregates household net wealth in 2025 into four groups: the bottom 50%, the middle 40%, the next 9%, and the top 1%, for each world region. The picture is stark: in every region, the top 10% owns the majority of wealth, while the bottom half owns almost none. Across regions, the bottom 50% holds between 1% and 5% of total wealth: just 1% in North America & Oceania, Sub-Saharan Africa, and the Middle East & North Africa; 3% in Europe, Latin America, and Russia & Central Asia; and 5% in South & Southeast Asia and East Asia. Put plainly, in every region, half of the population owns no more than 5% of that region’s wealth.

By contrast, the top 10% controls 60–74% of wealth, about 60% in Europe; 65–70% in South & Southeast Asia, East Asia, Latin America, and North America & Oceania; 70% in Sub-Saharan Africa; 73% in the Middle East & North Africa;  and 74% in Russia & Central Asia. In every region, one-tenth of the population owns at least 60% of all wealth.

Disaggregating the top 10% shows how concentrated the very top is. The top 1% alone holds a quarter of all wealth in Europe (25%), around a third in North America & Oceania (34%), South & Southeast Asia (35%), Sub-Saharan Africa (36%), Latin America (36%), the Middle East & North Africa (37%), and an excessively high 46% in Russia & Central Asia. In several regions, North America & Oceania, Latin America, the Middle East & North Africa, Sub-Saharan Africa, and Russia & Central Asia, the top 1% own more than the entire bottom 90% combined. One out of every 100 people owns more wealth than ninety individuals in the same group.

Notably,  in Europe,  the middle 40% holds a sizable 37%, and most of the top-decile share comes from the next 9% (35%) rather than the top 1%. Additionally, East Asia has the largest “next-9%” slice (39%) worldwide, followed by the Middle East & North Africa region (36%) and Europe, North America & Oceania (approximately 35%), consistent with the broad upper-middle profile seen in Figure 3.7.

Compared with the income splits in Chapter 2 (Figure 2.6), wealth is even more concentrated. The top 10% receives 36–57% of regional income but owns 60–74% of regional wealth, and the top 1% earns 12–24% of income but owns 25–46% of wealth. The gap between income and wealth concentration underscores the central finding of this section: within every region, ownership of assets is heavily concentrated at the very top.

Figure 3.9 shows, for each percentile of the global wealth distribution, which regions make up that slice. In 1995, the very top percentiles were overwhelmingly in Europe and North America & Oceania, who dominated the upper decile and especially the top 1%, while some of the Asian population and Sub-Saharan Africa were concentrated in the lower half. By 2025, the map of the upper tail is more multipolar, though not egalitarian. China is the standout mover: its color spreads across the upper-middle percentiles and enters the very top. Its share of the world’s top 1% rose from about one percent in 1995 to roughly one-sixth by 2025. Europe and North America & Oceania still account for a large portion of the global elite, but they now share that space with East Asia. The broad message mirrors Chapter 2’s evidence regarding income: the geography of the elite has diversified,  especially toward East Asia, but the structure of the pyramid endures.

Country-by-country patterns of wealth concentration

Having mapped the global distribution of wealth by region (Figure 3.7–Figure 3.9), we now zoom in on how wealth is split within countries. The four maps in Figure 3.10–Figure 3.14 mirror the income analysis in Chapter 2 (Figure 2.9–Figure 2.13), but for net household wealth². The picture is consistently starker than for income.

Figure 3.10 shows the share of household wealth owned by the bottom 50%. Everywhere in the world, the bottom half owns only a sliver of national wealth, at most around 14% and, in many places, just 1%. Large parts of Latin America, Sub-Saharan Africa, and the Middle East & North Africa fall in the lowest band on the map (below roughly 1–3.8%). The same pattern appears in parts of Central Europe and in the United States. By contrast, several Western European countries, Australia and New Zealand, and large Asian economies such as China and India sit one or two bands higher: their bottom halves still own little, but noticeably more than in the most unequal settings.

The shares of the middle 40% are illustrated in Figure 3.11. The highest bands cluster in Europe and in Oceania, where the middle 40% command a sizable portion of national wealth (around two-fifths, broadly in line with their population weight). The United States and Canada stand out with a much thinner middle share, closer to Latin American and African patterns. In Asia, the middle 40% also capture small shares in China and India.

Figure 3.12 highlights that the top decile owns the majority of wealth in most countries. The darkest colors cover Latin America, southern Africa, the Middle East, Russia, China, and India, as well as the United States, where the top 10% typically control well over 60% of household wealth. Europe and Oceania are lighter on the map: concentration is still high by any standard, but is less than in other parts of the world. Strikingly, nowhere does the top 10% own less than about 45% of total wealth; in some countries, their share approaches 86%, an extraordinary concentration for a group that represents one person in ten.

Focusing on the very top sharpens the contrast (Figure 3.13). The top 1% takes remarkably large shares across Latin America, the Middle East, southern Africa, Russia, India, China, Thailand, and North America. Several European countries and Oceania sit in lower bands, though even there the slice of the top 1% is substantial. In the most extreme cases, the top 1% holds more than 50% of total household wealth in that country; even the lowest values are close to 15%.

The wealth gap (top 10% vs. bottom 50% ratio) in Figure 3.14 is lowest in Western Europe and Oceania. China and India also perform relatively better. The ratio rises sharply across Latin America, the Middle East & North Africa, and southern Africa, and is high in the United States, Indonesia, and Russia.

Figure 3.10–Figure 3.14 confirm that wealth is highly concentrated at the top and even more unequally distributed than income (see Chapter 2). As in Chapter 2, the least unequal patterns are found in the regions of Europe and North America & Oceania, excluding the United States, and, in some cases, Canada. Blanchet and Martínez-Toledano (2023) attribute the higher levels of wealth inequality in the United States relative to Western Europe to the faster growth in the gap between house prices and stock market prices since the 1980s in the latter. The reason is that rising house prices tend to benefit the middle of the wealth distribution, as they own disproportionately more housing in their portfolio than the top or the bottom. The most unequal countries are concentrated in Sub-Saharan Africa, Latin America, and the Middle East & North Africa.

Main takeaways

The chapter shows that every region increased its net national wealth between 1995 and 2025, but the map of wealth has shifted toward Asia. East Asia’s share has risen, Europe’s has lessened, and the long-standing mismatch between population and wealth endures: regions with smaller populations, Europe and North America & Oceania, still command large shares, while populous Sub-Saharan Africa remains marginal.

National wealth is primarily built on domestic capital, but cross-border financial ties create global interdependence. These imbalances mean that part of the capital in debtor regions, most visibly North America & Oceania, is owned by residents of creditor regions, most notably East Asia. We return to this theme in Chapter 5 under the notion of “unequal exchange.”

Global wealth has grown far faster than income since the mid-1990s, rising from just over four to more than six times world income. Almost all of this increase sits in private balance sheets: private wealth climbed from roughly 260 to over 430 percent of world income, while public wealth stagnated at around 80–90 percent and turned negative in some regions. East Asia is the exception, with substantial and rising public wealth. In parallel, the share of income allocated to capital has increased, while labor’s share has declined, thereby reinforcing private asset accumulation.

Over the past few decades, the global elite has diversified. In 1995, the top of the distribution was overwhelmingly European and North American & Oceanian. Today, East Asia has firmly joined their ranks, so that the global top tenth is essentially shared across these three regions. The global “middle-wealth class” is now predominantly Asian, while other regions remain concentrated at the bottom and underrepresented at the top.

Within  countries, wealth concentration is even more extreme than income concentration. The bottom half owns little or nothing almost everywhere. The top decile commands the majority in all regions, and the very top one percent captures strikingly large shares. Even in the least unequal settings, wealth gaps remain vast: ownership is tilted decisively toward the top. Chapter 3 delivers a clear message: the world is wealthier, but ownership has shifted even more toward private hands; governments have not kept pace; and wealth is extremely concentrated at the top.

¹ Net (after-depreciation) versions in Dietrich et al. (2025) show the same direction but with lower capital shares because consumption of fixed capital is removed.

² Throughout these maps, wealth refers to household net wealth, financial and non-financial assets minus debts.

Chapter 2 examines income inequality from a regional perspective. It shows that the regions where most people live, South & Southeast Asia and Sub-Saharan Africa, remain far behind the richest ones, such as North America & Oceania and Europe. Within regions, income inequality is also large: in nearly all of them, the top 1% alone earn more than the bottom 50% combined. The chapter also highlights the role of redistribution, demonstrating that taxes and, especially, transfers can narrow these divides, although with varying effectiveness across regions.

Global and regional shifts in income and population since 1800

Over  the  past  two  centuries, the geography of income and population has undergone a significant transformation: while Europe and North America & Oceania remain the highest-income regions, East Asia, South & Southeast Asia, and Sub-Saharan Africa account for the majority of the world’s population, creating a profound imbalance between demographic weight and economic power.

Figure 2.1 presents a long-run view of yearly per capita income and population across world regions since 1800, drawing on the World Inequality Database (wid.world). On the left-hand side, the income panel displays an evident pattern of divergence, followed by partial convergence in recent years. For more than two centuries, North America & Oceania and Europe have stood out as the regions where people consistently earn the highest average incomes, well above the global level. North America & Oceania, in particular, has led since the early 19th century, with average earnings above €45,000 by 2025. Although the region’s long-term growth rate is relatively strong (1.6% per year since 1800), its pace has slowed in the 21st century (1.1% per year). Europe and Latin America have also slowed to near-stagnation since 2000.

At the other extreme, Sub-Saharan Africa has experienced persistent challenges. It remains the region where people earn the least, with average income still below €3,500 in 2025. Its performance has been volatile, with declines between 1980 and 2000 and only modest improvements since then. Although its recent growth rate of 1.8% per year since 2000 marks its most successful period of progress, the gap with the rest of the world remains substantial. The Middle East & North Africa has also seen uneven growth, with modest improvements in the early 21st century after a period of stagnation.

In contrast, East Asia tells one of the most remarkable income catch-up stories of modern history. From being the poorest region in the mid-20th century, it grew at 4.2% per year between 1950 and 2025, and at an even faster 5.0% per year since 2000. The result is a dramatic transformation: East Asia’s yearly per capita income, which was below €1,000 in 1950, now exceeds €17,000, surpassing most regions. South & Southeast Asia has also accelerated, especially since 1980, making it the second-fastest-growing region in the 21st century, behind East Asia. Russia & Central Asia, which experienced episodes of income decline in the late 20th century, completes the trio of fastest-growing regions during this century.

At the other extreme, Sub-Saharan Africa has experienced persistent challenges. It remains the region where people earn the least, with average income still below €3,500 in 2025. Its performance has been volatile, with declines between 1980 and 2000 and only modest improvements since then. Although its recent growth rate of 1.8% per year since 2000 marks its most successful period of progress, the gap with the rest of the world remains substantial. The Middle East & North Africa has also seen uneven growth, with modest improvements in the early 21st century after a period of stagnation.

Globally, the most dynamic period of income growth occurred between 1950 and 1980 (2.9% per year), fueled by postwar reconstruction in Europe, the boom in North America, and the first wave of acceleration in Asia. A second wave has taken shape since 2000 (2.2% per year), led this time by Asia, while other regions slowed. This contrasts sharply with the 19th century, when global income growth was minimal, at well under 1% per year, from 1800 until 1950.

The right-hand panel of Figure 2.1 complements this picture by tracing population dynamics. Asia has been the world’s demographic center, but its internal balance has shifted. East Asia, once home to 40% of the world’s people, now represents only 20%, as population growth slowed after the 1970s (see also Figure 2.2). South & Southeast Asia, by contrast, has become the most populous region, with one-third of humanity in 2025.

Sub-Saharan Africa is notable for its rapid demographic expansion: from 10% of the world’s population in 1800 to 16% in 2025, with further increases expected.

Other regions follow different trajectories. Europe, once home to almost one-fifth of the world’s people in 1900, now represents only 7%. North America & Oceania grew in relative terms but still account for just 5%. Latin America and the Middle East & North Africa, although larger than in 1800, remain medium-sized regions, accounting for about 7–8%. Russia & Central Asia remains stable at around 4% after two centuries.

Taken together, the two panels reveal a fundamental imbalance in the global economy: the regions where people earn the most (North America & Oceania and Europe) account for only a small share of the world’s population, while the most populous regions (South & Southeast Asia and Sub-Saharan Africa) have the lowest average incomes. This combination of demographic and economic asymmetries is central to understanding global inequality, and mirrors the findings from Chapter 1, where rising averages often conceal deep divides within and between regions.

Figure 2.2 helps place these results in a broader perspective by showing how the global distribution of income and population has shifted over time. The left-hand panel illustrates regional income shares, while the right-hand panel tracks population shares. At the beginning of the 19th century, East Asia accounted for approximately 32% of the world’s income, making it the world’s economic center. Over the following century and a half, its share collapsed to only 8% by 1950, before rebounding to 25% today. Europe, by contrast, expanded its share from 26% in 1800 to nearly 40% by 1900, before declining steadily to 17% in 2025. North America & Oceania started from just 1% in 1800, surged to almost 30% by the mid-20th century, and now also stands at 17%. South & Southeast Asia, once responsible for nearly one-quarter of global income, fell to just 8% around 1950 but has since climbed back to 17%. Sub-Saharan Africa’s share has remained low, shrinking from 7% in 1800 to only 4% today, similar to Russia & Central Asia. In contrast, Latin America and the Middle East & North Africa contribute around 7–8% each.

These shifts demonstrate how global economic weight has shifted over time, first toward Europe and North America & Oceania during the 19th and early 20th centuries, and more recently back toward Asia. Yet they also highlight a persistent imbalance:  two of the three most populous regions, South & Southeast Asia and Sub-Saharan Africa, still capture only a limited share of total income.

Income inequality across the world in 2025

In this next section, we examine income differences across regions in 2025. Figure 2.3 presents average monthly per capita national incomes by region, adjusted for purchasing power parity to ensure comparability. The disparities are immediate and dramatic. North America & Oceania stands out with average monthly incomes of about €3,800, about 3.2 times the world average. Europe follows at €2,900 per month, about 2.4 times the global mean. Russia & Central Asia (€1,700), East Asia (€1,500), and the Middle East & North Africa (€1,300) sit closer to the middle of the global distribution, though still above average. Latin America (€1,100) falls just below the global mean, while South & Southeast Asia (€600) lags significantly behind. Sub-Saharan Africa is at the very bottom, with an average of just €300 per month.

The ratios underscore the depth of these inequalities. On average, a person in North America & Oceania earns about thirteen times more than someone in Sub-Saharan Africa, and about 2.5 times more than someone in East Asia. Even within the higher-income group, North America & Oceania earns about 1.3 times more than Europe. By contrast, South & Southeast Asia earns only half the world’s average, and about 40% of East Asia’s level. Sub-Saharan Africa falls furthest behind: its income per person is about one-fifth of East Asia’s, one-tenth of Europe’s, and one-fourth of the world’s mean.

These comparisons show a world divided into clear tiers: a high-income group (North America & Oceania and Europe), a middle group (East Asia, Russia & Central Asia, and Middle East & North Africa), and regions below or far below the world average (Latin America, South & Southeast Asia, and Sub-Saharan Africa). This reinforces the broader lesson from Figure 2.1 and Figure 2.2: the regions where most people live remain far below the income levels of the world’s richest regions, cementing the demographic and economic imbalances at the heart of global inequality.

Figure 2.4 takes the analysis to the country level. Here, the lightest shades correspond to the highest per capita monthly incomes, while the darkest indicate the lowest. The global pattern is striking. The lowest incomes are concentrated in Sub-Saharan Africa, as seen in Figure 2.3, while the highest incomes are clustered in North America, Oceania, and certain parts of Europe. Within Europe, clear differences remain: northern and western countries are among the global leaders, while several in the east fall into lower-income brackets, closer to the levels of Russia & Central Asia. East Asia now occupies a middle position in the world distribution, representing a significant improvement compared to its position in the mid-20th century (see Figure 2.1). Meanwhile, the Middle East exhibits a sharp divide between oil-rich states in the Gulf, which achieve very high-income levels, and much poorer countries, such as Yemen.

The extremes highlight the scale of the global gap. In Luxembourg, monthly income per person is about €12,110, while in Burundi it is barely €50, more than a 240-fold difference. The accompanying Boxes at the end of this chapter expand on these findings: Box 2.1 ranks countries according to per capita income, and Box 2.2 shows how country size itself relates to per capita income.

Income inequality within regions in 2025

So far in this chapter, we have analyzed inequality across regions, comparing incomes between different parts of the world, both over the long run and in 2025. Another important dimension is how populations are distributed within those regions. Figure 2.5 provides this perspective by showing the global income distribution in 2025. Each colored area corresponds to a region, scaled by its share of the world population, with the world average indicated as a reference point.

The figure reveals the sharp contrasts that define today’s global economy. Sub-Saharan Africa and South & Southeast Asia stand out as the regions where the majority of people live below the global average income of around €1,300 per month. In Sub-Saharan Africa, in particular, a large share of the population is clustered at the very bottom, earning less than €500 per month, confirming the persistent disadvantage highlighted in Figure 2.3 and Figure 2.4. South & Southeast Asia spans a broader range, but still remains concentrated below global averages.

By contrast, Europe and North America & Oceania appear almost entirely to the right of the world average, with most of their populations earning several times more than the global mean. Russia & Central Asia also sit above the world average for the majority of their populations. Latin America and the Middle East & North Africa show a more mixed pattern: their populations are split between lower and higher income levels, reflecting both pockets of relative prosperity and areas of stagnation. East Asia illustrates one of the most significant transformations. Once concentrated at the very bottom of the world distribution (see also Figure 2.1 and Figure 2.7), the region now has a large share of its population above the global average. This shift highlights East Asia’s rapid upward mobility and its increasing influence in shaping the global middle class.

Figure 2.6 revisits the standard breakdown of the population into the bottom 50%, the middle 40%, and the top 10% (see Figure 8), with the latter now divided between the top 1% and the next 9%. Regions are ordered by the share of income earned by the top 1%, which immediately reveals how unevenly income is distributed globally. Europe demonstrates the least unequal distribution: the bottom 50% earn 19% of total income, the highest share worldwide, while the middle 40% capture 45%. Together, this means that nearly two-thirds of all income in Europe goes to the bottom 90% of the population, a pattern unmatched elsewhere. Yet inequality is still visible: the top 10% earn 36%, and the top 1% alone captures 12%.

East Asia and North America & Oceania present similar profiles in some respects: in both, the middle 40% earn just above 40% of total income (42% and 41% respectively), and the top 10% capture about 46%. In both cases, the bottom 50% earn only 13%, significantly below Europe. However,  there  are  also  notable differences between the two regions. In North America & Oceania, the top 1% alone takes 20% of all income, a larger concentration than in East Asia, where the top 1% capture 17%. This means East Asia’s middle class is slightly stronger relative to the top, even though both regions show a weaker bottom half compared to Europe.

Russia & Central Asia is marked by an even sharper concentration at the very top: its top 1% earn 23% of total income (similar to the Middle East & North Africa), far more than the bottom 50% (14%). This inversion, where the top 1% earn more than the entire bottom half, is present in every region except Europe. Put differently, in almost all regions, just 1% of the population receives more income than half of the region’s population combined.

The imbalance is most extreme in Latin America, Sub-Saharan Africa, and the Middle East & North Africa. Here, the bottom 50% earn just 8–11% of income, while the top 10% capture between 55% and 57%. Within that, the top 1% alone secures 20–24% of total income, more than double the share of the bottom half. These regions combine both a very weak bottom 50% and a disproportionately large top 1%, making them the most unequal. South & Southeast Asia shows a similar profile but with a somewhat stronger bottom 50% (14%), though its top 1% still captures 21% of total income. These results show that extreme concentration of income at the very top is a defining feature of the global economy today.

Figure 2.7 provides a geographic breakdown of global income groups in 1980 and 2025, highlighting how the composition of top earners and other groups has shifted over time. In 1980, the global elite was overwhelmingly concentrated in North America & Oceania and Europe, which together accounted for most of the world’s top income groups. Latin America also had some presence near the top, but China and India were almost entirely confined to the bottom half of the distribution. At that time, China had virtually no presence among the global elite, while India, Asia in general, and Sub-Saharan Africa were heavily concentrated in the very lowest percentiles.

By 2025, the picture looks markedly different. China’s position has shifted upward: much of its population has moved into the middle 40%, and a growing share has entered the upper-middle segments of the global distribution. This is also true for other Asian countries. India, by contrast, has lost relative ground: in 1980, a larger part of its population was in the middle 40%, but today almost all are in the bottom 50%. Sub-Saharan Africa has also remained in the lower half of the global distribution, though its population is now more evenly spread within the bottom 60% rather than clustered almost entirely below the 30th percentile, as it was in 1980.

At the upper end of the distribution, continuity is unmistakable. North America & Oceania continue to dominate the global top 1%, with Europe also maintaining a large share. The composition of the global elite has diversified somewhat, with the Middle East & North Africa and Russia & Central Asia gaining ground, while Latin America’s representation has declined compared to 1980.

The shifts in Figure 2.7 reveal a partial reshaping of the global income hierarchy. The rise of China has expanded the global middle class, while the very top remains concentrated in the Global North, and the bottom is heavily populated by South Asia and Sub-Saharan Africa. In short, the geography of inequality has been reshuffled, but not overturned.

Income inequality within countries in 2025

Figure 2.8 to Figure 2.12 take us inside national income distributions, showing how income is divided between the bottom 50%, the middle 40%, and the top 10% (with a focus also on the top 1%). Together, they illustrate how inequality plays out not only between regions but also within individual countries, and how the balance between these groups varies across the world.

Figure 2.8 begins with the bottom 50%. The poorest half of the population captures only a small share of national income almost everywhere. In the most unequal countries of Latin America and Sub-Saharan Africa, their share falls as low as 6–12%, while in the least unequal economies (mainly in Europe) it rises to 19–29%. North America & Oceania occupy an intermediate position: Canada and Australia are closer to Europe, while the United States is closer to the patterns of inequality of the Global South, with the bottom half receiving around 12–14%. Across Asia, outcomes are diverse. South Asia and much of Southeast Asia fall below 16%, while East Asia is in the mid-range (14–19%), though China lags behind several of its neighbors. Strikingly, nowhere in the world does the bottom half secure more than 30% of income, underscoring their structural exclusion from national income.

Figure 2.9 turns to the middle 40%, often considered the backbone of the middle class. Here the contrasts are equally stark.  In the most unequal settings, especially in Latin America and parts of Africa, the middle 40% receive as little as 23–25% of income, reflecting a fragile middle class. By contrast, in Europe and parts of North America & Oceania, this group’s share rises to 44–50%, making them central to national income distribution. Asia shows both ends of the spectrum: India’s middle 40% remains in the lower levels, while China’s earns a larger share.

Figure 2.10 highlights the top 10%. Nowhere does this group earn less than 26% of income. Even in the least unequal countries, the richest 10% still receives more than a quarter of all income. In many countries, especially in Latin America, Sub-Saharan Africa, and the Middle East & North Africa, their share rises above 50%, reaching up to 71% in the most unequal cases. North America & Oceania again split: Canada and Australia sit closer to European patterns, while the United States is more unequal, with the top 10% capturing nearly half of all income.

Figure 2.11 zooms in further on the top 1%. This group, though tiny, captures remarkably large shares. In the least unequal settings, the share of this group remains around 7–11%, while in the most unequal countries, it increases to about 21–44%. Latin America and the Middle East & North Africa are again at the upper end, with the United States also appearing among the most unequal. By contrast, Canada, Australia, New Zealand, and most of Europe record lower top 1% shares, though still substantial by any measure. The comparison highlights how some countries have seen the rise of economic elites whose income rivals, or even exceeds, that of the entire bottom half.

Finally, Figure 2.12 illustrates the ratio of the incomes of the top 10% to those of the bottom 50%.  This single measure captures the scale of inequality in a way that is easy to grasp and compare (see also Figure 1.13). In Europe, the ratio is relatively low, around 9–19: the top 10% earn nine to nineteen times more than the bottom 50%. In Canada, Australia, and New Zealand, the ratio is relatively low; however, in the United States, it is higher and closer to the levels found in the Global South. In Latin America and southern Africa, the ratio exceeds 40:1, and in some cases surpasses 100:1, meaning the top 10% earn more than a hundred times the income of the bottom half. Much of South Asia and the Middle East & North Africa also register high ratios, while East Asia is closer to the middle range.

These figures collectively present a consistent picture: income inequality within countries is severe globally, but its intensity varies systematically. Europe, and parts of North America & Oceania, are among the least unequal regions by global standards, although even there, there is large concentration at the top groups. The United States is a notable example of high inequality compared to its high-income peers. Latin America, southern Africa, and the Middle East & North Africa are at the other extreme, with both weak bottom and middle groups and extreme concentration at the top. Asia illustrates the diversity of possible trajectories, with East Asia performing better overall. Across all countries, the maps confirm a fundamental point: the poorest half is consistently underrepresented, the middle class is fragile in much of the world, and the top, especially the top 1%, continues to command disproportionate power over income. The World Inequality Database is particularly useful in this context, as it provides consistent and comparable measures of inequality across countries.

The role of redistribution in reducing income inequality

The previous maps showed how unequal income distributions are across countries before government intervention.  This section turns to a key question: how much do governments reduce inequality through redistribution? Redistribution here refers to the combined effect of taxes and transfers, such as social benefits, pensions, and other government programs, on the distribution of income. Figure 2.13 provides the first overview by comparing, at the regional level, inequality before and after redistribution, measured by the ratio of the average income of the top 10% to that of the bottom 50%. The results show that redistribution reduces inequality everywhere, but the extent of its impact varies widely across regions. Europe stands out as the most effective case: before redistribution, the richest 10% earn about nineteen times more than the bottom 50%, but afterwards this ratio falls to ten times, the lowest level worldwide. North America & Oceania also achieve a sharp reduction, with the ratio falling from thirty-five to eighteen. Latin America records the highest pre-redistribution gap in the world at 72:1, yet taxes and particularly transfers bring this down to 50:1. This is a substantial improvement, but still leaves the region among the most unequal, alongside Sub-Saharan Africa and the Middle East & North Africa. By contrast, redistribution has only a limited effect in Sub-Saharan Africa, the Middle East & North Africa, South & Southeast Asia, and Russia & Central Asia, where ratios fall by four points or less.

The reason for these differences becomes clearer in Figure 2.14, which separates the effects of taxes and transfers over time. The left panel isolates the effect of taxes alone. With few exceptions, the impact of taxation on inequality is minimal. In Latin America, and in Russia & Central Asia since the 2000s, tax systems are not only weakly redistributive but sometimes regressive, meaning they increase the income gap between rich and poor. In most regions, the redistributive power of taxes is low. Even in the region with the most persistently progressive tax system, North America & Oceania, the effect of taxation alone is modest. Figure 2.14 also shows that tax progressivity has stagnated in most regions since 1980, and that there has been no cross-country convergence in effective tax rates (see Fisher-Post and Gethin (2025))¹.

Figure 2.15 complements the left-hand panel of Figure 2.14. It maps tax progressivity at the country level. In many countries, particularly in Latin America, Eastern Europe, and parts of Africa, taxes amplify rather than reduce inequality. At the other end of the spectrum, a smaller group of countries, mostly in North America & Oceania and Western Europe, manages to reduce inequality through progressive tax design, cutting gaps between top and bottom groups by 5%–20%.

The right panel of Figure 2.14, which adds transfers, tells a very different story. With pensions, social benefits, and other transfers included, redistribution becomes persistently much more powerful. Europe achieves the largest reductions, cutting inequality by over 40%. North America & Oceania also record large reductions once transfers are taken into account, though slightly less than in Europe. Latin America, despite its regressive tax systems, achieves substantial reductions through transfers alone, underscoring their central role in contexts of high inequality. East Asia has also strengthened redistribution since the 2000s, reaching levels comparable to those of the Middle East & North Africa. By contrast, South & Southeast Asia, Sub-Saharan Africa, and Russia & Central Asia remain at the bottom, where both taxes and transfers, though positive, have limited reach.

Figure 2.16 reinforces this conclusion with a global map of redistribution accounting for both taxes and transfers.  Transfers consistently reduce inequality across all regions, but their strength varies greatly. The largest impacts appear in Western Europe and in North America & Oceania, where redistribution cuts inequality by 40%–60% and, in some cases, even more. South Africa is also notable for the magnitude of redistribution through transfers. Latin America shows significant reductions as well, but nearly all of the effect comes from transfers, while weak or regressive taxes undermine progress. In much of Asia and Africa, redistribution remains modest, with a handful of countries, such as Japan, Thailand, and Taiwan, achieving larger gains than their neighbors².

Tax-and-transfer systems reduce inequality everywhere, but the effectiveness of redistribution depends heavily on fiscal design. Taxes alone often do little to close income gaps, and in many countries they make them worse. Transfers, by contrast, provide a consistent and powerful equalizing force. According to research by Fisher-Post and Gethin (2025), transfers account for more than 90% of the reduction in inequality, while taxes contribute less than 10%.

Main takeaways

Income inequality between regions remains a defining feature of the global economy. Regional comparisons reveal that contemporary inequalities stretch back nearly two centuries. Over the past decades, East Asia and South & Southeast Asia have experienced rapid gains in per capita income, yet large gaps remain. Today, the regions with the highest incomes, North America & Oceania and Europe, account for only a small share of the world’s population, while two of the most populous regions, South & Southeast Asia and Sub-Saharan Africa, continue to record the lowest average incomes. The scale of inequality between regions is remarkable: average incomes in North America & Oceania and Europe are several times higher than the global mean, while those in Sub-Saharan Africa and South & Southeast Asia remain far below average, with incomes only a fraction of the level of the Global North. To illustrate the scale of this divide, the average person in North America & Oceania earns around thirteen times more than the average person in Sub-Saharan Africa.

Within regions, inequality is also stark. In all parts of the world, the bottom 50% secures only a small fraction of national income, whereas extraordinary shares are concentrated in the top 10%, and especially the top 1% of the population. In every region except Europe, the top 1% alone  earn  more  than  the  entire bottom half combined. In terms of changes in income over time within each region, China demonstrates the greatest upward shift, with much of its population moving into the middle 40% of the global distribution, reflecting the rise of a new middle class, even as inequality persists.

Inequality levels within countries vary significantly. Countries in Europe and North America & Oceania are among the least unequal, though even there, top groups retain significant dominance. The United States is a clear outlier, displaying much higher inequality than its high-income peers. At the other extreme, countries in Latin America, southern Africa, and the Middle East & North Africa combine weak bottom and middle groups with extreme concentration at the top.

Redistribution through taxes and transfers plays a critical role in reducing inequality. While tax-and-transfer systems reduce inequality in every region, their effectiveness depends heavily on fiscal design. Taxes alone often have little impact, and in some countries they even exacerbate inequality, whereas transfers consistently serve as the main equalizing force, accounting for more than 90% of the reduction in inequality. Strengthening the progressivity of taxes and expanding transfer systems, therefore, remain essential to reduce income concentration at the top and exclusion at the bottom.

Looking ahead, Chapter 3 examines wealth inequality, where disparities are even larger and the concentration at the top is even more pronounced than in the case of income.

Box 2.1: Country rankings for large countries according to per capita national income

Box 2.1 ranks large countries (those with populations above 10 million) by per capita national income in 2024 and complements Figure 2.4. The ranking underscores the vast disparities in living standards across the world, even after adjusting for comparable prices (PPP). Small countries are excluded here to ensure comparability, as many resource-rich economies or financial centers (such as Luxembourg, Qatar, or Monaco) display extremely high averages that are not representative of broader global patterns. These cases are presented separately in Box 2.2.

At the top of the ranking are Taiwan, the United States, the United Arab Emirates, the Netherlands, Sweden, Belgium, Germany, Australia, Canada, and Saudi Arabia. In these economies, per capita monthly incomes range between €3,200 and €4,300. Put differently, in just a single day, the average resident of these countries earns as much as the average resident of the poorest large economies does in an entire month.

At the other end of the spectrum, the poorest large countries are Burundi, Yemen, Mozambique, Somalia, the Democratic Republic of Congo, Malawi, Madagascar, South Sudan, Niger, and Chad. In these countries, average monthly incomes fall below €130, and in Burundi, they collapse to just €50.

It is important to stress that living on €100 a month, barely €3 a day, represents a country average. Yet averages conceal even harsher realities: given the large inequalities documented throughout this chapter, a large part of the population in these countries survives on far less than the average, making daily life considerably more precarious than these figures alone suggest.

Box 2.2: Country rankings according to per capita national income

Table B2.2.1 in Box 2.2 extends the income ranking to all countries, including small and ultra-small economies. Many of these very small countries record extremely high per capita incomes, well above the world average. The top ten countries are Monaco, Liechtenstein, Luxembourg, Bermuda, Guernsey, Jersey, Singapore, the Cayman Islands, Macao, and Anguilla. Most are well-known tax havens or offshore financial centers, where concentrated wealth, financial services, or resource rents boost national income averages far beyond what is seen in larger economies. Monaco and Liechtenstein, for example, report average monthly incomes exceeding €12,000, more than 200 times higher than those recorded in the poorest countries.

Most of the ten countries in this ranking have a population below one million inhabitants. Singapore is the notable exception, combining high income levels with a population of about six million.

At the other end of the table, the poorest small countries look very similar to those listed in Box 2.1, with the addition of the Central African Republic and Liberia.

Figure B2.2.2 in Box 2.2 places these outcomes in historical perspective. It shows that ultra-small countries, with populations under 100,000, have consistently recorded per capita incomes well above the world average since 1970, and their relative advantage has widened over time. By 2024, their incomes stand at around four times the global average. By contrast, the only category with incomes persistently below the world average is the very largest countries, those with more than 500 million inhabitants, namely China and India. Yet here the trend is impressive: both countries have experienced rapid income growth over the past decades and are now converging toward the world average, a dramatic shift compared to the much lower relative levels observed in 1970.

These findings highlight how small financial hubs and tax haven economies, despite their limited populations, play an outsized role in shaping global income patterns. At the same time, they underscore the structural disadvantage of the world’s most populous countries, where hundreds of millions of people live in economies that still lag behind global averages—even if, in the cases of China and India, the gap is closing at a remarkable pace.

¹ Importantly, Fisher-Post and Gethin (2025) find that tax progressivity is uncorrelated with national income per capita.

² Fisher-Post and Gethin (2025) also highlight important compositional differences in transfers. In Europe, social assistance programs are the most significant driver of redistribution, while in Africa, healthcare-related transfers play a comparatively larger role.

Inequality remains one of the defining economic challenges of our time. Global incomes and wealth levels have risen dramatically, but the distribution of these gains has been profoundly uneven. Today, a very large share of income and wealth is concentrated in the hands of a small share of the population, while billions of people continue to live with limited resources and opportunities.

This chapter analyzes global inequality from several perspectives. We begin by showing current global income and wealth disparities, before highlighting how these divides have deepened at the very top of the distribution. We then turn to a long-run historical view and analyze how global income inequality has evolved over the past two centuries. Finally, we shift the lens to regional comparisons, where the contrast between and within world regions is equally stark. Together, these perspectives provide a foundation for the rest of the report, which explores the current state of global inequality in detail and from multiple angles.

The World is Becoming Richer, but Unequally

For much of human history, population growth was the main driver of economic expansion. Starting in the nineteenth century, however, income per person began to rise much more rapidly than population growth, marking the onset of sustained modern economic growth. Figure 1.1 shows that the world’s population grew from about 1 billion in 1800 to more than 8 billion in 2025, an eightfold increase. Over the same period, average yearly income per person rose from about €900 to nearly €14,000 (in 2025 euros), a sixteenfold increase. Taken together, these two forces translated into an average rise in global output of about 2.2% per year over 225 years.

The growing distance between the population and income curves reflects a profound transformation in living standards. More output per person has meant that humanity, on average, has become far more productive than in the past. At the same time, this rapid growth raises critical questions. Sustaining such levels of output puts increasing pressure on the planet’s resources, and the benefits of growth have been far from evenly shared. In theory, today’s global income would be enough to provide every person with about €1,200 per month (€14,000 per year). In reality, however, these resources are distributed very unequally, with a small minority capturing a disproportionate share of the gains.

Understanding Inequality through Population Groups

Throughout this report, we study inequality within a unit by dividing the unit’s population into broad groups. A unit can typically be the world, a region, or a country. The bottom 50% represents half of the population with the least resources. In the context of global income, this means the poorest half of people worldwide, those earning the least. Above this group is the middle 40%, often described as the “global middle class”. These individuals earn enough not to belong to the poorest group, yet they do not form part of the economic elite. At the very top lies the richest 10%, which includes the segment of the global population with the highest incomes.

To better understand how economic resources are concentrated, we also look more closely within the top 10%. This allows us to analyze what share of the population controls the bulk of labor income and asset ownership. Such detail is crucial because inequality is not only about the divide between the poor and the rich, but also about the extreme concentration of resources at the very top. Measuring this concentration with precision is central to the work of the World Inequality Lab and will be a recurring theme throughout the report.

To put these categories into perspective, it is helpful to visualize how many people belong to each group today. In 2025, the world’s population stands at 8.2 billion, and the adult population at 5.6 billion.  Figure 1.2 shows that the bottom 50% includes 2.8 billion adults, almost equivalent to the combined adult populations of China, India, the United States, Indonesia, Nigeria, Brazil, and Russia. The middle 40% comprises about 2.2 billion adults, similar to the combined adult populations of China, India,  and Mexico. By contrast, the top 10% comprises only 556 million individuals, roughly the size of the combined adult populations of the United States, Pakistan, and Brazil.

Looking more closely at the very top, the numbers become even smaller but highly significant. The top 1% includes about 56 million adults, similar to the adult population of the United Kingdom. The top 0.1% (5.6 million adults) is similar in size to the total population of Singapore. The top 0.01% amounts to 556,000 adults, about the total population of Genoa in Italy. The top 0.001%, with 56,000 adults, could all fit inside a football stadium. Going further, the top 0.0001% (around 5,600 adults) would fill a concert arena, the top 0.00001% (560 adults) a theater, and the top 0.000001% (56 adults) a single classroom. These comparisons will help illustrate just how concentrated the very top of the distribution is, and they will serve as a reference throughout the report to help readers grasp the magnitude of global inequality.

Extreme and Rising Income Inequality

Having these figures in mind, Figure 1.3 illustrates the extent of global inequality. The top 10% (about 560 million adults) receive 53% of global income, while the bottom 50% (roughly 2.8 billion adults) capture only 8%. The contrast becomes even sharper when we zoom into the right-hand panel: the top 1%, a group of just 56 million people, earn 2.5 times more than the entire bottom half of humanity. Put differently, a population comparable to the United Kingdom’s receives more income than a group as large as the combined populations of China, India, the United States, Indonesia, Nigeria, Brazil, and Russia.

If we look beyond these broad groups and zoom in further, the concentration of income becomes even starker. Figure 1.4 makes the concentration of income even more visible. The third column shows that the top 0.1% earn as much as the entire bottom 50%. This means that a group of people no larger than the population of Singapore takes in the same income as half of the world’s population. At the very peak, inequality becomes staggering: the top one-in-a-million (about 5,600 people) earn, on average, one-eighth of what the bottom 50% together receive. In other words, a small concert arena’s worth of individuals has an annual income comparable to that of billions of people.

The fourth column of Figure 1.4 provides another perspective. On average, a person in the bottom 50% earns about €5,100 per year (roughly €425 per month). A person in the top 10% earns about €159,300 annually (€13,275 per month), and a person in the top one-in-a-million earns around €248 million each year (more than €20 million per month). This means that while half of the world’s adults live on less than €500 per month, the top 10% earn 31 times as much, and the very richest earn nearly 50,000 times more.

The fifth column of Figure 1.4 shows the thresholds required to enter different income groups. To belong to the top 10%, an individual must earn about €65,500 per year (around €5,460 per month). To reach the top 1%, the threshold rises to about €250,300 annually (€21,860 per month). Unsurprisingly, most of the population earning at these levels is concentrated in Europe, North America, and Oceania. We will return to these regional income disparities in Chapter 2.

Turning to income growth, the last column of Figure 1.4 shows that global income per adult has grown at an average annual rate of 1.1% since 1980. At first glance, the data might suggest a narrowing of inequality: the bottom 50% grew faster (1.8%) than the top 10% (1.2%). But a closer look reveals a different picture. Within the top 10%, the very richest groups have consistently outpaced the average. Every group at or above the top 0.1% has seen growth rates above 1.8% per year, meaning the richest have become richer, even as the bottom half made relative gains. This is one of the strengths of the World Inequality Database: by measuring the entire income distribution, it prevents misleading conclusions that might arise if we stopped at the top 10%.

Figure 1.5 complements this analysis by displaying the income growth incidence curve. It shows that while the bottom half of the world has enjoyed relatively robust growth since 1980, the middle 40% experienced stagnation, with some groups growing at less than 1% per year. Meanwhile, growth accelerated again at the very top, with the richest 1% and especially the top 0.1% capturing the fastest gains. The result is a polarized pattern: the poor and the rich have seen their incomes rise, while the global middle class has benefited the least over the past four decades. These uneven growth dynamics explain why today’s distribution of income is so skewed: the gains of the past decades have consolidated mainly at the very top. Such polarization also carries political implications: the relative exclusion of large middle-income groups, the stagnation of many poorer groups in rich countries, and the growing influence of the global plutocracy all raise pressing questions for democratic stability and global governance; we will come back to this point in Chapter 8.

Wealth Inequality is Larger, More Extreme, and Rising Faster

So far, we have seen that inequality is very large when looking at incomes. But income inequality only tells part of the story, since it largely reflects labor earnings. Capital income, which is even more concentrated and closely tied to wealth ownership, adds another layer of inequality.

Figure 1.3 makes this clear: the global top 10% own three-quarters of all wealth, while the bottom 50% hold just 2%. Zooming further in, the concentration becomes staggering. The top 1% alone, roughly the adult population of the United Kingdom, control 37% of global wealth. This is more than eighteen times the wealth of the entire bottom half of the world population, a group as large as the combined adult populations of China, India, the United States, Indonesia, Nigeria, Brazil, and Russia.

Figure 1.6 sheds light on just how extreme inequality becomes at the very top. The top one-in-a-million (about 5,600 adults, enough to fill a concert arena) collectively hold 3% of global wealth, more than the entire bottom half of the world’s adult population.

The disparities are equally stark when we compare averages. A person in the bottom 50% owns about €6,500, while someone in the top 10% holds around €1 million. But the average wealth of a member of the top 0.001% (about 56,000 adults) is nearly €1 billion, and those in the top one-in-100 million (just 56 adults worldwide) hold on average €53 billion. To put this into perspective, the wealth of a single individual at that level can surpass the individual annual GDP of several Sub-Saharan African countries. These figures underline that today’s inequality is driven not only by the divide between the poor and the rich, but also by the widening gap within the top itself.

Thresholds also illustrate the steep hierarchy. To leave the bottom 50%, an individual needs at least €29,200 in net worth. To enter the top 10%, the bar is €265,600. To join the ranks of the top 0.001%, one must be a centi-millionaire, while entering the top one-in-a-million requires billionaire status. These thresholds highlight the vast distance separating the very top from the rest of the population.

Turning to dynamics, Figures 1.6 and 1.7 show how wealth accumulation has played out over the past three decades. At first glance, one might think inequality is narrowing: the bottom 50% saw their wealth grow at about 3.4% annually, slightly faster than the top 10% (2.9%) or even the top 1% (3.1%). But a closer look shows a very different story. At the very top, billionaires have enjoyed annual increases of 8% per year ; they have multiplied their already vast fortunes, while the absolute gains of the bottom half remain modest.

This accelerating concentration is visible in Figure 1.8, which contrasts the bottom 50% and the top 0.001% trends. Since 1995, the top 0.001%, an ultra-wealthy group, have consistently owned a larger share of global wealth than half of the world’s adult population combined, and their advantage has only grown. By 2025, about 56,000 adults (a group that could fit in a football stadium) own more wealth than 2.8 billion adults combined.

Wealth inequality is not just very large; it is persistent and self-reinforcing. Over the past three decades, the wealthiest individuals have pulled away at an extraordinary pace; this has also affected the distribution of opportunities and power worldwide.

Two Centuries of Persistent and Extreme Income Inequality

While today’s wealth disparities are staggering, they are not an anomaly. The long-run record shows that extreme inequality is not a recent phenomenon but a defining feature of the modern global economy¹. Despite two centuries of sustained economic growth, the global distribution of income has also remained profoundly unequal. The evidence shows that income inequality has been both persistent and substantial over the past two centuries. Figure 1.9 illustrates this continuity: since 1820, the top 10% have consistently captured more than half of all global income, while the bottom 50% have never received more than 15%. The middle 40% improved their position somewhat in the twentieth century, particularly from the 1920s to the 1980s, before experiencing a setback up until 2000 and a partial recovery thereafter. Their trajectory mirrors shifts in the income share of the top 10%, while the bottom 50% has remained largely excluded from these gains. Although there has been a slight upward trend for the poorest half in recent decades, their share of income, below 10%, remains lower than it was two centuries ago. So when reductions in inequality did occur, they mostly benefited the middle class, not the bottom half of the world population.

Figure 1.10 zooms in on the extremes of the distribution and reveals the rise of very high-income concentration. In 1820, the bottom 50% received about 14% of global income; by 2025, their share had fallen to just 8%, despite representing about 2.8 billion adults. Meanwhile, the top 1%, around 56 million adults in 2025, have consistently captured close to 20% of global income over the last two centuries. Even more striking is the trajectory of the top 0.1%. Over the past six decades, their income share has converged with that of the bottom 50%. A group now roughly the size of Singapore’s population has persistently earned as much as half of the adult population combined. A broader pattern is also evident: the shares of the top 1% and the top 0.1% peaked around 1910, declined until the 1970s, rose again to a local maximum in 2007, and have followed a slightly upward trajectory since the COVID-19 pandemic.

Figure 1.10 puts these trends into a broader perspective by combining the evolution of income growth with income group size. The left-hand panel shows the dramatic increase in global average incomes since 1820, but also underscores how unevenly this growth has been shared. In 1820, the top 10% earned 50% of global income, compared with 14% for the bottom 50%. By 1980, the top 10% still controlled 52%, while the bottom half’s share had fallen to just 6%. Today, in 2025, the top 10% capture 53% of income, while the bottom 50% have only slightly recovered to 8%. Over two centuries, inequality has widened, with the bottom half losing ground relative to both the middle and the top.

Extreme inequality is also evident at the very top. The global top 0.1% captured 9% of income in 1820, 6% in 1980, and 8% in 2025. While this represents a slight decline over two centuries, it is far smaller than the collapse in the share of the bottom 50%. In other words, the relative gap between the poorest and the very richest has grown wider.

The right-hand panel of Figure 1.11 makes this disconnect especially evident by visually comparing income shares with population shares in 2025. In an equal world, each group’s share of income would match its share of the population. Instead, we see the opposite: the bottom 50%, who make up half of humanity, receive only 8% of global income, while the top 0.1%, too small to be visible in the right-hand-side bar, captures the same amount. This stark contradiction underscores how deeply entrenched extreme income inequality remains, even after two centuries of global economic growth.

While global income has grown enormously over two centuries, its distribution has remained very unequal, with the poorest half persistently excluded from large gains and the very richest consolidating their advantage.

Regional Inequality Is Stark Both Across and Within Regions

The historical view shows that inequality has persistently been a defining trait of the global economy. Yet, this global picture hides deep divides between and within world regions. Regional inequality matters because it is shaped not only by economics, but also by deep-rooted historical, political, and cultural legacies. It also highlights another key dimension: inequality does not just separate rich and poor individuals in the same context; it also entrenches divides between entire parts of the world. Regional comparisons allow us to see both how far apart regions stand from each other (Figure 1.12) and how unequal they are internally (Figure 1.13). The specific country groupings are detailed in Box 1.1.

Figure 1.12 contrasts average income and wealth per adult across world regions in 2025, relative to the world average. The patterns are striking. Wealthier regions are also typically higher-income regions, though there are exceptions. East Asia, for instance, has a higher average wealth level than Russia & Central Asia but a lower average income. At the top of the scale, North America & Oceania and Europe stand well above the global mean. In these regions, and in East Asia, wealth levels exceed income levels relative to the world average. In the rest of the world, however, income levels are relatively higher than wealth levels.

At the bottom of the scale, Sub-Saharan Africa, South & Southeast Asia, and Latin America remain far below the global average on both counts, though Latin America’s average income is somewhat closer to the world mean. The Middle East & North Africa and Russia & Central Asia occupy an intermediate position: their average incomes are closer to East Asia’s and not far from Latin America’s, but their average wealth remains much lower. The contrast is sharp: for instance, in 2025, average wealth in North America & Oceania is 338% of the world average, while in Sub-Saharan Africa it is just 20%. Put differently, the average adult in North America & Oceania owns more than sixteen times the wealth of the average adult in Sub-Saharan Africa.

Turning to Figure 1.13, the focus shifts from differences between regions to disparities within them, using the top 10%/bottom 50% (T10/B50) ratio. This simple but powerful metric asks: on average, how many times more does the top 10% earn (or own) compared to the poorest half? The results reveal enormous divides2. First, wealth gaps everywhere are far larger than income gaps. Even in Europe, the region with the lowest income inequality, the wealth of the top 10% is nearly 200 times that of the bottom 50%. In South & Southeast Asia and East Asia, regions with relatively lower wealth inequality, wealth disparities are still significant and many times greater than income inequality. At the extreme, the Middle East & North Africa and North America & Oceania stand out with the widest wealth divides, over 520 to 1. By contrast, their income ratios are lower than 55 to 1. Other regions, such as Sub-Saharan Africa and Latin America, also combine very high income gaps (over 50 to 1) with staggering wealth gaps (over 260 to 1).

From Figures 1.12 and 1.13, we can see that inequality is enormous both across regions and within them. Some regions, like North America & Oceania, enjoy higher average income and wealth than the world average, yet still exhibit vast internal disparities. Others, like Sub-Saharan Africa, face the double burden of low average levels and extreme internal divides.

In Chapter 2, we will return to regional income inequalities in greater detail, before turning in Chapter 3 to explore regional wealth inequalities more fully. Together, these perspectives help clarify how inequality is structured not only across the globe, but also within the regions that make it up.

Main takeaways

Over the past two centuries, the world has witnessed an unprecedented rise in average income and output. Yet, global income and wealth shares remain deeply unequal.

The global population is unevenly distributed across the income and wealth hierarchy: 2.8 billion adults belong to the bottom 50%, 2.2 billion to the middle 40%, and only 556 million to the top 10%. Within this top group, sizes shrink from 56 million in the top 1% to just 56 individuals at the very top 1/100 million.

Income inequality is very large. It has persisted and mutated during the last two hundred years and is increasing (see also Chancel and Piketty, 2021). Today, the global top 10% earn more than half of all income while the bottom 50% earn only a tiny fraction, and the richest 0.1% take as much as half of the world’s adult population combined. Looking back two centuries, the top 10% have consistently captured over 50% of global income, while the bottom 50% have remained stuck below 15%.

Wealth inequality is even larger than income inequality and is increasing more rapidly. The top 10% own three-quarters of all assets while the bottom half holds only 2%, and the top 1% alone control 37%, far more than the entire bottom 50%. At the extreme, a few thousand billionaires hold more wealth than billions of people combined, and since the 1990s, centi-millionaires and billionaires have seen their wealth grow far faster than everyone else.

A unique feature of the World Inequality Database (wid.world) is that it measures income and wealth across the entire distribution, from the poorest to the very richest individuals. This makes it possible to uncover extreme concentration at the very top, which would otherwise remain invisible. The chapters that follow will explore these divides in greater depth. Understanding where and how inequality is entrenched is the first step toward designing policies that can address it.

Box 1.1 Regions used in the World Inequality Report 2026

For analytical purposes, the World Inequality Lab divides the world into eight regions: East Asia (EASA), Europe (EURO), Latin America (LATA), the Middle East & North Africa (MENA), North America & Oceania (NAOC), Russia & Central Asia (RUCA), South & Southeast Asia (SSEA), and Sub-Saharan Africa (SSAF).

These categories are not fixed: users of the World Inequality Database (wid.world) can regroup countries according to their own criteria.

Box 1.2 The Inequality Transparency Index

High-quality data are essential for informed debates on inequality, yet in many countries information on income and wealth distribution remains scarce or inaccessible. To address this gap, the World Inequality Lab, in partnership with the United Nations Development Program, created the Inequality Transparency Index (ITI). Updated annually alongside wid.world, the ITI measures how transparent countries are in publishing inequality data.

Scores range from 0 to 20. An ideal score reflects the publication of annual distributional accounts of income and wealth, combining household surveys with administrative tax records. No country has yet achieved full transparency.

The ITI evaluates four data sources (income surveys, income tax, wealth surveys, and wealth tax data) across three criteria: quality, frequency, and accessibility. Its purpose is not only to assess the state of inequality statistics but also to encourage governments to publish the data they hold. Without such transparency, public debates risk being guided by conjecture rather than evidence.

¹ Furthermore, Alfani (2025) shows that inequality for both income and wealth has tended to grow continuously also in the last seven centuries, not only since the Industrial Revolution.

² Note: If the top 10% earn 40% of all income and the bottom 50% earn 20%, then the rich make 10 times more on average than the poor (40 ÷ 10 = 4 vs. 20 ÷ 50 = 0.4; 4 ÷ 0.4 = 10).