Global Distributions of Capital and Labor Incomes

This article studies the global distributions of capital and labor incomes among individuals in 2000 and 2016. By constructing a novel database covering approximately 80% of the global output and 60% of the world population, two major findings stand out. First, the world underwent an important process of capitalization. The share of world individuals with positive capital income rose from 20% to 32%. Second, the global middle class benefited the most, in relative terms, from such a capitalization process, with China being the main driver of this global trend. The findings of this paper are robust to changes in the income definition, top-income and functional income distribution adjustments. The global composition of capital and labor incomes is more equal today than it was twenty years ago. • This paper analyzes the global distributions of capital and labor incomes. • It introduces the “Global Capital and Labor Database” for 2000 and 2016. • The share of world individuals with positive capital income rose from 20% to 32%. • The global middle class benefited the most from such a capitalization process. • The findings of this paper remain robust across a range of adjustments.