Who are the global top 1 percent?

That is the title of a new paper by Sudhir Anand (University of Oxford) and Paul Segal (King's College London), and published in the journal World Development (ungated earlier version here). The paper answers the question in the title, and is based on a combination of household survey data and data from the World Top Incomes Database (one of the many famous outputs of Thomas Piketty, Emmanuel Saez, Tony Atkinson and others, and now called the World Wealth and Income Database). The paper is also an update of this earlier paper by the same authors.

There's lots of interest in the paper, but here are the headline results:

...the threshold for an individual to enter the global top 1% in 2012 is an annual income of about PPP $50,600 per capita household income, or PPP$202,000 for a family of four. We find that for many developed countries it includes the top 4–8% of their national income distribution. These income groups are likely to include senior professionals and some middle managers as well as business owners and ‘‘supermanagers”... Among developing countries, Brazil has the largest share of its own population in the global top 1%, where 1.5% of its national distribution is in that group...

An individual in the global top 0.1%, on the other hand, has a minimum of PPP$181,000 per capita household income, or about PPP$725,000 for a family of four. This comprises the top 1% in the US, and the top 0.3%—0.5% in Japan, Germany, France and the UK...

The threshold for an individual to enter the global top 10% in 2012 was about PPP$15,300 per capita household income, or PPP$61,000 for a family of four. This income level would not count as "rich" within a developed country: for most developed countries this group includes more than half their populations. For the US the top 60.4% of its population is in the global top 10%, and for Switzerland the corresponding figure is 71.2%.

Anand and Segal also look at changes in inequality over time:

The two decomposable measures, MLD and Theil T, show that within-country inequality was rising up to 2005 — which was offset by declining between-country inequality — but that from 2005 to 2012 even within country inequality declined...

The income shares of the top 10%, the top 1%, and the top 0.1% also rise and then decline, peaking in 2002 for the top 10% and in 2005 for the top 1% and the top 0.1%...

I note that declining global inequality is consistent with other recent research (see for example my post here). Anand and Segal find that the turning point for global inequality was around 2005.

The focus of the paper overall is the increasing trend towards people in developing countries joining the global top one percent. Here's what they conclude:

The turning point for the participation of the emerging economies in the global income rich appears to have been around 2005, which mirrors our finding that the advanced economies’ share of WEF [MC: World Economic Forum] attendees peaked in 2006 and has been on a declining trend since then. Moreover, we find that global inequality starts to decline around the same time, and that top 1% income shares within countries start to decline also from 2005. This trend was no doubt sharpened by the global financial crisis in 2008, which is having a lasting effect of slow growth in the advanced countries. But many developing countries were already converging with the developed economies before that point. As long as emerging economies continue to grow faster than the developed countries — which seems likely for the near future — we can expect both trends to continue.

None of that should surprise us.