Special Report

Countries With the Widest Gaps Between Rich and Poor

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5. Brazil
> Gini coefficient: 0.47 (pre-tax + transfers: 0.58)
> Unemployment rate: 12.8%
> GDP per capita: $14,098
> Poverty rate: 20%
> Population: 209.3 million

Slammed by its largest-ever recession in 2015 and 2016 and roiled by political corruption scandals, Brazil’s economy has struggled in recent years. Brazil ranks among the most corrupt countries on this list. Currently, one in every five Brazillians lives below the poverty line, and about 4% of the population lives on just $3.20 a day.

Jair Bolsonaro, Brazil’s new president, took office in January and pledged to end government corruption and reduce state intervention in the economy. What, if any, effect this will have on reducing income inequality remains to be seen.

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4. Costa Rica
> Gini coefficient: 0.48 (pre-tax + transfers: 0.53)
> Unemployment rate: 8.1%
> GDP per capita: $15,208
> Poverty rate: 20.4%
> Population: 4.9 million

Costa Rica enjoys some of the highest living standards of any Central American nation — as partially evidenced by a GDP per capita of $15,208. Formerly dependent primarily on agriculture, Costa Rica’s economy now relies mostly on tourism. Despite stable economic growth in recent years, the nation’s poverty rate has remained between 20% and 25% for the last two decades. Tighter budgets have diminished the country’s social safety net in recent years, and recent credit rating downgrades could slow economic growth going forward.

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3. India
> Gini coefficient: 0.50 (pre-tax + transfers: 0.51)
> Unemployment rate: 2.6%
> GDP per capita: $6,147
> Poverty rate: N/A
> Population: 1.3 billion

Home to 1.3 billion people, India is the second most populous country in the world and has some of the worst income inequality. In the majority of countries on this list, taxes and transfers reduce income inequality by well over 10%. In India, however, taxes and transfers only close the income gap by 2.6%, the smallest improvement of any country on this list. With a diverse economy ranging from subsistence farming to major industrial companies competing at a global level, India is rapidly modernizing and transitioning to a more liberalized economy.

One major impediment to income equality in the country is a prevailing culture of discrimination against women. Fewer than one in every four women over age 15 in the country participate in the labor force, compared to about 79% of men of the same age.

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2. China
> Gini coefficient: 0.51 (pre-tax + transfers: 0.55)
> Unemployment rate: 4.4%
> GDP per capita: $14,401
> Poverty rate: N/A
> Population: 1.4 billion

Having recently transitioned from a totalitarian socialist economy to a more market oriented one, China’s economy is unique on this list. As a result of the transition, economic growth has been rapid in recent years, but the country remains economically hamstrung by tight government controls and corruption. Likely due in part to the close relationship between government and business in the country, China has the third highest corruption score among the countries on this list. Taxes and transfers only reduce income inequality by 6.2% in China. In most countries on this list, taxes and transfers reduce inequality by well over 10%.

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1. South Africa
> Gini coefficient: 0.62 (pre-tax + transfers: 0.72)
> Unemployment rate: 27.3%
> GDP per capita: $12,287
> Poverty rate: 26.6%
> Population: 56.7 million

Income inequality in South Africa today is, in large part, the legacy of the government’s former policy of apartheid. The policy segregated the country’s black majority from the white minority to the great economic and political disadvantage of the former group. Apartheid was the law of the land from 1948 to 1994, and many of the economic disadvantages that were law during that near half century are now so deeply entrenched that South Africa has the worst income inequality of any OECD member or affiliate state. More than one in every four workers in the country are unemployed, and frequent labor strikes and skill shortages hinder the country’s economic growth outlook.