Special Report

Countries With the Widest Gaps Between Rich and Poor

Source: Thinkstock

10. Russian Federation
> Gini coefficient: 0.38 (pre-tax+transfers: 0.49)
> Unemployment: 5.5%
> GDP per capita: $25,353
> Poverty: N/A
> Population: 144.3 million

The Russian Federation has the 10th-largest income gap among OECD countries and affiliates. Russia has the world’s sixth highest GDP at more than $3.5 trillion, but much of that wealth is disproportionately concentrated in the hands of a few.

Corruption may be a causal factor for the large income gap in the Russian Federation. The Russian government holds tight control over business within the country. Oligarchs with close ties to the Kremlin are able to leverage those relationships into lucrative business deals. This system continually funnels money into the pockets of the rich and leaves little for working class citizens. Russia is tied with Mexico as the most corrupt country in the OECD — and one of the most corrupt countries in the world — according to the Corruption Perception Index.

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9. United States
> Gini coefficient: 0.39 (pre-tax+transfers: 0.51)
> Unemployment: 4.9%
> GDP per capita: $54,198
> Poverty: 17.2%
> Population: 323.1 million

The United States’ economic indicators generally point to a robust economy. The U.S.’s GDP per capita of over $54,000 is among the highest in the world, and the unemployment rate is relatively low at 4.9%. Also, the U.S. GDP at purchasing power parity is the world’s second largest at $17.3 trillion. However, the benefits of a strong economy are not evenly felt among the population. The U.S. poverty rate of 17.2% is one of the highest among OECD countries.

U.S. taxes and transfers reduce the Gini coefficient by just 22.9%, a lower percentage than most nations considered. Income inequality persists in the United States despite high social spending. The United States spends 28.8% of its annual GDP on social programs that aid financially struggling Americans, the second largest share among countries considered, trailing only France.

Source: Thinkstock

8. Turkey
> Gini coefficient: 0.40 (pre-tax+transfers: 0.43)
> Unemployment: 10.8%
> GDP per capita: $24,496
> Poverty: 17.1%
> Population: 79.5 million

Turkey has a wide gap between its richest and poorest citizens, and its tax code is doing little to shrink the divide. Turkey’s Gini coefficient decreases by only 5.8% after taxes and transfers. For context, factoring in taxes and transfers reduces the Gini coefficient by at least 20% in 32 of the 42 countries considered.

Turkey’s job market is struggling, as just 51.8% of Turks 15 and older are either employed or seeking a job. This labor participation rate is the second lowest of all countries considered, trailing only Italy. The country’s unemployment rate of 10.8% and poverty rate of 17.1% are among the highest for OECD nations or affiliates. Higher labor force participation and employment rates can help shrink the divide between rich and poor.

Source: Individuo from Santiago, Chile / Wikimedia Commons

7. Chile
> Gini coefficient: 0.45 (pre-tax+transfers: 0.49)
> Unemployment: 6.7%
> GDP per capita: $22,350
> Poverty: 16.8%
> Population: 17.9 million

Chile’s income inequality is high, and the nation’s tax structure does little to close the gap between the rich and the poor. Taxes and transfers shrink Chile’s Gini coefficient by 6.6%, one of the lowest decreases among OECD countries. Chile spends 12.0% of its GDP on social programs to aid financially struggling citizens, one of the lowest percentages among OECD nations. Programs to encourage increased labor force participation among women would likely help reduce income inequality in the South American nation. Only about half of women 15 and older in Chile are either working or looking for a job, a smaller than typical share.

Chile, like many of the other OECD nations with the highest income inequality, also has a relatively low GDP per capita at $22,350.

Source: Thinkstock

6. Mexico
> Gini coefficient: 0.46 (pre-tax+transfers: 0.48)
> Unemployment: 3.9%
> GDP per capita: $18,129
> Poverty: 16.7%
> Population: 127.5 million

Income inequality is a bigger problem in Mexico than in all but five other OECD countries and partner states. One reason for the high level of inequality is the country’s large share of low income workers. Some 24.7 million workers in Mexico hold minimum wage jobs, and Mexico’s minimum wage is the lowest among OECD nations.

Corruption in Mexico likely exacerbates income inequality. Based on citizens’ perceptions of government and institutional corruption, Mexico is tied with Russia as the most corrupt country of those considered, and one of the most corrupt in the world. Likely due in part to government fraud, waste, and abuse, income inequality in Mexico improves by only 4% after taxes and transfers, a smaller improvement than in all but two other OECD nations or partners.