Wealth inequality, also known as the wealth gap, is the unequal distribution of assets among residents of a country. Wealth inequality is evident between countries, states and different groups of people. Wealth includes the value of cars, homes, savings, investments, and personal valuables. Wealth inequality is a strong determinant of unequal living standards in a community.
Research suggests that globalization has reduced global inequality between nations but has increased inequality within nations. Typically, developing countries are characterized by greater inequality than in developed countries.
The Gini index, or Gini coefficient, is a statistical measure of distribution developed by the Italian statistician Corrado Gini. The Gini index is used to gauge economic inequality by measuring income distribution or wealth distribution. The coefficient ranges from 0 to 1, with 0 representing 0% and 1 representing 100%. A coefficient of 0 represents perfect equality, and a coefficient of 1 represents perfect inequality. The closer to 1 the coefficient is, the greater the inequality. If a country were to have a Gini coefficient of 0, that means that everyone would have the same income.
Based on the most recent Gini index estimates from the World Bank, the five most equal countries, in terms of wealth, are:
- Ukraine (.241)
- Slovenia (.256)
- Norway (.259)
- Slovak Republic (.261)
- Czech Republic (.261)
All of these top five countries are located in Europe. The top 1% of earners in Europe take 12% of income and the bottom 50% of earners take 22% of income. For comparison, in the United States, the top 1% of earners take 20% of income and the bottom 50% of earners take 10%. The less inequality in Europe is attributed to the fact that Europe has not let its market economy become a market society, where market forces control other areas of society such as education, health, and wages. Examples of this are social healthcare systems and more favorable labor markets.
Based on the most recent Gini index estimated from the World Bank, the five most unequal countries, in terms of wealth, are:
- South Africa (.634)
- Namibia (.610)
- Haiti (.608)
- Botswana (.605)
- Central African Republic (.562)
South Africa’s income inequality has become worse over the years. The top 1% of earners take home almost 20% of income and the top 10% take home 65%. That means that 90% of South African earners take home only 35% of all income. Incomes in South African remain to be racialized, gendered, and spatialized, meaning that white people are more likely to find work (and work that pays better) than their black counterparts; female workers earn about 30% less than male workers; and urban workers earn about double that of those in the countryside.
In general, African countries’ income inequality is rooted in the dualistic economic structure, where high-income sectors offer limited capacity to generate employment compared to the lower-income sector, where most of the workforce earns far lower incomes. Additionally, there is a high concentration of capital (physical, human, and land) in Eastern and Southern Africa, while other regions lack resources.