Inequality Within Countries is Falling: Underreporting Robust Estimates of World Poverty, Inequality, and the Global Distribution of Income

The second term is the covariance of the di¤erences of two functions of sample means and their population analoges, and thus should be obtainable from data on the distribution ofX and the sampling procedure via the Central Limit Theorem and the delta method. [...] However, starting in the early 2000s, misreporting of the bottom 50% accounts for a larger and larger fraction of overall misreporting for both our baseline GDP and HFCE series, exceeding the survey income share of the bottom 50% by 2019 for the baseline HFCE series and closely approaching it for the baseline GDP series. [...] Our baseline GDP series delivers similar results to the WID for underreporting by the top 10%, but an important di¤erence for the bottom 50%, who, in our estimates, noticeably report a lower and lower share of their GDP in the household surveys starting in the early 2000s, diverging from the level of underreporting in the WID. [...] Figure 15 presents time paths of population-weighted within-country inequality measured with the Gini, the Theil index, the Atkinson indexes with inequality aversion equal to 0.5 and 1, and the ratio of the income share of the top 10% to the bottom 50%. [...] Table II presents our estimates of the change in the top 10% shares of the dis- tributions of GDP and HFCE for the worlds seven largest countries, accounting for roughly half of the worlds population, together with similar estimates from the WID, our replication of the WID and from the World Bank PIP.