OECD Countries With The Widest Gap Between Rich, Poor: 24/7 Wall St.

From 24/7 Wall St.: The widening gap between the rich and poor is not just an American problem. According to a new study by the Organisation for Economic Co-operation and Development, income inequality in most economically developed countries is the worst it has been in nearly 25 years. 24/7 Wall St. reviewed the OECD's report and identified the 10 countries with the worst income inequality.

"In OECD countries today, the average income of the richest 10% of the population is about nine times that of the poorest 10%," the study reports. And in many of these countries, income inequality is increasing as more and more wealth is concentrated in the hands of the rich.

Read: The Countries With Biggest Spread Between Rich and Poor

In some countries the gap is even more pronounced. The income of the bottom 10% of earners has actually declined while the income of the top 10% has increased. In Israel, Turkey and the United States, the average income of the top 10% is 14 to one compared to the bottom 10%. In Mexico and Chile, it is an astounding 27 to one.

In many of the countries with the greatest levels of income inequality, there is also very limited public social expenditure. Seven of the 10 countries on this list spend below the OECD average -- as a percentage of GDP -- on social benefits. For example, the share of unemployed who receive benefits in both Chile and Turkey are less than half the OECD average. Mexico has no unemployment insurance at all.

The 10 countries on this list are ranked by their levels of income inequality using the Gini coefficient, where zero represents perfectly equal distribution and one represents maximum inequality. Also included are the change in income inequality from the mid-1980s, employment rates and the change in income for the rich and poor. While inequality has worsened in most countries, the situation has improved in some. Even in these countries, however, inequality remains at historically high levels.

The countries with the widest gap between the rich and poor:

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• 10. New Zealand

  > Gini coefficient: 0.330<br> > Change in income inequality: +21.8%<br> > Employment rate: 72.3% (6th highest)<br> > Change in income of the rich: +2.5% per year<br> > Change in income of the poor: +1.1% per year New Zealand performs well by a number of economic indicators, including employment, where it ranks sixth highest out of the 27 OECD countries in the study. Income in New Zealand has increased across the board since the 1980s, but the percentage annual increase among the top decile was more than twice as great as among the bottom decile. Among OECD nations, capital income in New Zealand as a percentage of total household income grew the most for the richest group and decreased substantially for the poorest group.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 9. Australia

  > Gini coefficient: 0.336<br> > Change in income inequality: +8.7%<br> > Employment rate: 72.4% (5th highest)<br> > Change in income of the rich: +4.5% per year<br> > Change in income of the poor: +3% per year The difference in the annual increase in income between the richest and the poorest in Australia from the mid-1980s to 2008 is one of the largest among all countries in the study. The average annual change in income for the bottom decile was 3%, compared with the top decile's 4.5%. This caused the Gini coefficient to increase 8.7% over those years. Australia has one of the highest minimum wages, as a percentage of average wages, of all the G-20 countries. The country also has a fairly high employment rate.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 8. Italy

  > Gini coefficient: 0.337<br> > Change in income inequality: +9.0%<br> > Employment rate: 56.9% (3rd lowest)<br> > Change in income of the rich: +1.1% per year<br> > Change in income of the poor: +0.2% per year In Italy, income inequality increased 9% between 1985 and 2008. According to the OECD, earnings for the wealthiest 10% increased an average of 1.1% each year, while earnings for the poorest 10% grew just 0.2% annually. Italy has the third-lowest employment rate among the 27 nations in the study, with just 56.9% of working-age adults holding jobs in 2008. Since 1985, unemployment benefits declined by more than 50% to one of the lowest recipient rates in the OECD.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 7. United Kingdom

  > Gini coefficient: 0.345<br> > Change in income inequality: +7.9%<br> > Employment rate: 70.3% (10th highest)<br> > Change in income of the rich: +2.5% per year<br> > Change in income of the poor: +0.9% per year The UK had one of the biggest increases in the income gap between the wealthy and the poor over the past two and a half decades. On average, the income of the bottom 10% increased 0.9%, while income for the top 10% grew 2.5% per year. After Israel and Australia, the UK had the third-largest difference between the top decile's annual income increase and the bottom decile's increase. The income ratio of the wealthiest citizens to the poorest citizens is 10 to one.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 6. Portugal

  > Gini coefficient: 0.353<br> > Change in income inequality: n/a<br> > Employment rate: 65.6% (14th highest)<br> > Change in income of the rich: +1.1% per year<br> > Change in income of the poor: +3.6% per year Despite its high Gini coefficient, Portugal's income inequality has been improving. From the mid-1980s to the late 2000s, the incomes of the country's poorest increased an average 3.6% each year. The incomes of the richest grew only 1.1% annually. The country has increased its efforts to redistribute income since the mid-1980s, such as through benefits for the unemployed.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 5. Israel

  > Gini coefficient: 0.371<br> > Change in income inequality: +13.8%<br> > Employment rate: 60.2% (7th lowest)<br> > Change in income of the rich: +2.4% per year<br> > Change in income of the poor: -1.1% per year In Israel, the average income of the bottom 10% actually decreased between 1985 and 2008. On average, income of the top 10% increased 2.4% per year. During the same period, income of the poorest 10% declined 1.1% each year -- the worst rate of decline among the 27 nations studied. Only one other country, Japan, saw its bottom decile's income fall as well. According to the OECD, the top 10% of Israel's residents make 14 times more than the poorest 10%.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 4. United States

  > Gini coefficient: 0.378<br> > Change in income inequality: +12.1%<br> > Employment rate: 66.7% (13th highest)<br> > Change in income of the rich: +1.9% per year<br> > Change in income of the poor: +0.5% per year Inequality in the United States increased significantly from 1985 to 2008, putting it in the fourth-worst spot in the study. As with many other countries in which income inequality has increased, average income has gone up across all income groups since the mid-1980s, but not equally. The income of the wealthiest 10% has greatly outpaced the poorest 10%. The share enjoyed by the top 0.1% in total pretax income quadrupled in the 30 years to 2008.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 3. Turkey

  > Gini coefficient: 0.409<br> > Change in income inequality: -5.8%<br> > Employment rate: 46.3% (the lowest)<br> > Change in income of the rich: +0.1% per year<br> > Change in income of the poor: +0.8% per year Turkey was one of the few OECD countries to experience a narrowing of the gap between rich and poor, with income inequality improving 5.8% between 1985 and 2008. However, it still has the third-highest income inequality among the countries in this study. Part of Turkey's problem is a relatively low number of government programs to aid the poorest citizens. The average government social expenditure among OECD nations is close to 20% of GDP, while it spends just above 10% -- the third-lowest percentage. The wealthiest 10% of Turkey's residents make 14 times more, on average, than the poorest 10%.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 2. Mexico

  > Gini coefficient: 0.476<br> > Change in income inequality: +5.1%<br> > Employment rate: 60.4% (8th lowest)<br> > Change in income of the rich: +1.7% per year<br> > Change in income of the poor: +0.8% per year Mexico has one of the highest rates of income inequality. Among all OECD countries, Mexico has the lowest amount of public social expenditure as a percentage of GDP. It also has the lowest unemployment benefit recipient rates. Finally, the country has the lowest minimum wages as a percentage of average wages.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

• 1. Chile

  > Gini coefficient: 0.494<br> > Change in income inequality: n/a<br> > Employment rate: 59.3% (4th lowest)<br> > Change in income of the rich: +1.2% per year<br> > Change in income of the poor: +2.4% per year Chile is one of the few countries where the income of the poor increased at a higher annual rate than the income of the wealthy, 2.4% to 1.2%. Nevertheless, the South American nation has the worst income inequality among the 27 OECD nations examined. Chile has a particularly high rate of self-employed individuals, primarily because of its large farming class. The income ratio of the top 10% to the bottom 10% is 27 to one.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

Comments

[Blodo]

01:20 PM on 01/03/2012

Not mentioned in the article are the surprising societal costs of high income inequality.

This Ted Talks by Richard Wilkinson looks at these costs.
http://www.youtube.com/watch?v=cZ7LzE3u7Bw

[jimdavis11]

01:22 PM on 12/14/2011

Two things I will bet on: 1. We were not on the top 10 list 10 years ago. 2. We will become no 1, in no time, at all as long as keeping tax breaks for the rich dominants our political agenda.

[neolow]

02:23 PM on 12/13/2011

The article is not quite right. The US Census Bureau calculation of the 2010 Gini coefficient for the US is .467, .089 points higher. Gini coefficient's value depends on whose calculating it. Here's some interesting information about income equality. This article is from 2008 but tells the story very well. Including a justification that income inequality makes people work harder to succeed. Studies show that the countries with highest upward mobility have low income equality. (http://harvardmagazine.com/2008/07/unequal-america-html?page=0,1) The graphs show that until the mid-70's incomes rose and fell together. Then suddenly the income of the top 5% took off. Something happened with our economic system/policies --- the Fed Reserve, Treasure, Taxes, etc--- that caused this great divergence. I've been doing research and found the Federal Reserve Reform Act of 1977. Does anyone know anything about this?

[Blodo]

01:38 PM on 01/03/2012

That is an excellent article. However, I would point out that the idea that income inequality makes people work harder is almost an afterthought in the article, and draws from a couple of limited studies on golfers, baseball players and race car drivers. Those same studies also show that as income inequality rises, the overall team performance decreases as does the individual performance of players within those teams.

The article goes on to note some of the troubling correlations between income inequality and such damaging social phenomena such as higher crime rates. It them postulates the reasons we might be finding these correlation, including the disintegration of social networks.

Anyways, thanks for the link. A good read.

[Joshua MG]

04:35 PM on 01/03/2012

I am not 100% as I am more familiar with the situation here in Canada... but basically the federal reserve act (we had a similar thing happen here in 1997) basically stated that banks no longer need to have the money in their posession (ie worth, actual legal tender, assets etc) but can lend as much money as they want. No limits. With no limits on how much interest they can charge. They basically sold the currency system to the banks, which is actually something that many important people throughout history opposed. From Jesus to the founding fathers of the US. Currency NEEDS to be controlled by government and NOT the banks.
Again, this is just my recollection from what I've read over the last few years and I can't quote sources or actual figures. But the sale of the currency of both countries has set both economic systems to fail; and then some.

As Abraham Lincoln said: "The privilege of creating and issuing money is not only the supreme prerogative of Government but it is the government’s greatest creative opportunity. The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. By the adoption of the principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity."

[intranautt]

08:13 PM on 12/12/2011

I'm always stuck in the middle, and falling fast. Soon I'll be stuck in the mud.

[mspender]

12:59 AM on 12/08/2011

It is true that income inequality in the US is reaching Gilded Age levels, and that is pretty shameful, but the article above, particularly the list of countries, is a little misleading. Or at least, people here seem to be misunderstanding some things.

The list in which we made number 4, includes only OECD countries - that is, the report did not compared all countries in the world and it did not include the poorest countries - where huge income inequality is the norm - but it looked only at OECD countries, i.e. countries that are economically better off than most. The report does confirm that income disparity is growing even in advanced countries like the US, the UK and Australia, as well as in emerging economies like Chile or Turkey. We may now be number 4 among OECD countries, but as a consolation, if the report had included Haiti or Afghanistan or El Salvador - countries that cannot get into the OECD - we might look a lot better.

[Epilef2000]

06:06 PM on 12/10/2011

But comparing the US to these third world mini non-OECD countries to make us feel better is kinda cheating

[mspender]

02:54 AM on 12/11/2011

True. But I was only pointing to a fact that people posting comments seem to have missed - possibly because they looked only at the list and pictures, which contributed to the article being a little misleading.

[Doris Carman]

10:23 PM on 12/07/2011

So maybe social expenditures are not the cause of inequality.obama has been saying and also the house and senate that its social entitlements accounting for our problem. Well not accordinng to this article

[Dave Harpe]

08:47 PM on 12/07/2011

We are beaten on this list only by Turkey, Mexico, and Chile. We can catch up with them if we just elect more Republicans and blue dog Democrats. Let's be number ONE!!

[jimdavis11]

01:25 PM on 12/14/2011

I was tempted to flag your comment as abusive! (chuckle)

[tc71087]

06:38 PM on 12/07/2011

We are number 4 on a list of inequality gap, and I do not want to celebrate.

[ccsysglf]

05:53 PM on 12/07/2011

1%rs your ONLY number 4, and you thought of yourself as winners. ows/people factor still around and waiting our turn, it's coming....

[asiras]

04:48 PM on 12/07/2011

mfitz11 has it right - Obama is no great shakes, he has caved from his positions during his candidacy, and cooperated too much with the dark side. However, when the option is a Newt, even Bush/Cheny/Scalia start to seem preferable.

[lauriegc]

02:28 PM on 12/07/2011

Check this out - http://www.ted.com/talks/richard_wilkinson.html

Describes why we should all be concerned about income disparity.

[Doris Carman]

10:30 PM on 12/07/2011

It seems to me this is another share the wealth ticket. Must be where obama got his speech.but I dont believe it is the correct way. If it were that simple we could all live in communes and to hell with the govt.

[kazazajua]

01:37 PM on 12/07/2011

Watch out America, Canada's going to pass you on the list! Our Prime Motha,,, Stephen Stupid has made it his number one priority.

[Dave Harpe]

08:49 PM on 12/07/2011

Can we help by sending some of our Republicans to Canada?

[kazazajua]

10:49 PM on 12/07/2011

Sadly they are already moving, and some we thought we got rid of are coming back.
(David Frum)

[sagdogalone]

01:23 PM on 12/07/2011

Please correct me if I am in error. Didn't all/most of these economies take a swig of Chicago School Kool-Aid? (Weather they wanted to or not, is a separate thread)
And, didn't Our Lord and Savior, Ronald Reagan, declare Saint Milton an Economic Genius?
That adherence to his doctrine would make the world better for everyone?
I suppose better is a matter of perspective.

[CollegePrepExpert]

01:10 PM on 12/07/2011

THhe OECD says the countries are ranked by "social justice" -- income, access to services, equal access to education, etc. Doesn't seem to be a lot of justice here.

[Dave Harpe]

08:51 PM on 12/07/2011

Read again. This list is the ten worst, not best.

[CollegePrepExpert]

10:26 AM on 12/08/2011

Thank you, but I know that. Not sure what's in my comment that made you think otherwise. In the full report, the U.S. finished 27th out of 31 countries (not good), and 20th in access to equal education (still not good). I wrote about it briefly a few weeks ago when the OECD's report was first released. http://bit.ly/u9JFUy Oh, well, misunderstanding, I guess...

[NevadaLib]

12:59 PM on 12/07/2011

Republicans won't be satisfied until we're NUMBER 1!