Income inequality projections for the Shared Socioeconomic Pathways (SSPs)

This paper presents global scenarios of future national Gini coefficients, based on an econometric model of the evolution of income inequality within countries over the last three decades. These projections are defined within the scenario framework of the Shared Socioeconomic Pathways (SSP) in climate research, in which income inequality is a qualitative dimension, but not quantified. The projections are driven primarily by total factor productivity (TFP), education attainment at different levels of education, and social public spending. We combine projections of TFP and education from the SSPs and scenarios of public spending with the historical model results to generate Ginis by SSP with uncertainty. The resulting Gini trends across SSPs are distinct and broadly consistent with the SSP narratives. Divergence in Ginis across the SSPs is strongest in emerging economies, and weakest in industrialized countries. The insights from this analysis can enrich the SSP narratives along new dimensions, such as capital and labor income shares and trade.