What question did this study set out to answer?

The aim is to illustrate the growing disparity in income per capita among countries over time.

August 1, 1997Open Access

Divergence, Big Time

Key Points

The aim is to illustrate the growing disparity in income per capita among countries over time.
Analyzed historical income data from 1870 to 1990.
Calculated ratios and standard deviations in per capita income among countries.
Estimated upper and lower bounds for long-run income growth.
Income ratio between the richest and poorest countries increased from 9:1 to 45:1.
The standard deviation of per capita income doubled during the period.
Average income gap between the richest and all countries grew from $1,286 to $12,000.

Abstract

Historical data are unnecessary to demonstrate that perhaps the basic fact of modern economic history is massive absolute divergence in per capita income across countries. A plausible lower bound on per capita income can be combined with estimates of its current level in the poorer countries to place an upper bound on long-run income growth. Between 1870 and 1990, the ratio of richest to poorest countries' income increased from roughly 9 to 1 to 45 to 1, the standard deviation of (natural log) per capita income doubled, and the average income gap between the richest and all other countries grew nearly tenfold from 1, 286 to 12, 000.

Bookmark

View Full Paper