Some politicians say that globalization has increased prosperity around the world. But others disagree - they argue that globalization has increased income inequality. So which side is right? Let's look at the data. First, let's look at real income gains from 1988 to 2008 across the entire world’s population, divided into income percentiles. This is called the Global Incidence Curve. It illustrates how incomes have risen for each income group, from the poorest to the richest.
What it shows is that everyone's income has grown - but not everyone's income has grown equally. The wealthiest 1% grew a lot, and so did the global middle class. In fact, almost a third of the world's population - mostly from the Asian middle to lower class - saw their income skyrocket over just two decades. That is a huge deal. In fact, that increase is so dramatic and affects so many people that it led to the first decrease in global inequality since 1820.
But what is going on in the middle? The 80th to 90th global percentile represents mostly the lower and middle class in the United States and other Western countries, and for these people, incomes have barely increased at all. In fact, even though income inequality has dropped at the global level, at the national level, it has increased in most countries.
Since most people compare themselves to their neighbors, not to people on the other side of the world, this means it might “feel” like globalization is driving an equality, even if it's not. This means that it's possible that both sides are right - that globalization increases overall prosperity around the world, even as it reduces equality in individual countries.