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832 23 MAY 2014 • VOL 344 ISSUE 6186 sciencemag.org SCIENCE

By Mara Hvistendahl

S HANGHAI, CHINA—Starting in 1949,

the Communist government led by

Mao Zedong waged war on inequality

of all kinds. The administration seized

property from privileged classes, im-

prisoned intellectuals, and appointed

teams of workers to run universities. The

revolution upended the class structure,

and the party campaigned against inher-

ited wealth and gender discrimination. By

the time the Cultural Revolution ended and

Mao died in 1976, the government had man-

dated a bland unisex style of dress and effec-

tively abolished property ownership. Society

had ostensibly been “leveled off,” even if in

practice the new system concentrated re-

sources in the hands of party cadres.

Then, beginning in the 1980s, the coun-

try pulled an abrupt about-face. China re-

introduced land rights, allowed foreign

investment, and spurred private enterprise

in a few designated areas. Inequality was

no longer the enemy; in fact, the govern-

ment signaled that it was to become the

new norm. The reformist leader Deng

Xiaoping disparaged Mao’s egalitarianism

as “everyone eating from the same big pot.”

Overturning that failed ideal would bring

growth to everyone eventually, he sug-

gested: “It is good for some people to get

rich first.”

Some people did. China now has more

than a million millionaires and more than

200 billionaires. Although no country can

quite match this meteoric rise, similar sto-

ries have played out across the developing

world. For example, the Latin American

middle class mushroomed from roughly

100 million in 2000 to about 150 million a

decade later, according to the World Bank.

But a rash of new studies—based on long-

itudinal surveys, better cross-sectional

data, and renewed attention from scholars

—has also laid bare extraordinarily high

levels of inequality in these growing econo-

mies. In China, the richest 10% now makes

13 times as much as the poorest 10%, com-

pared with five times as much in the United

States, according to data from the China

Family Panel Studies, run by Peking Uni-

versity’s Institute of Social Science Survey

in Beijing. With economic development,

“the rising tide has indeed raised all boats,”

notes University of Maryland, College Park,

sociologist Reeve Vanneman. “But the big

yachts have done better, so overall income

inequality is increasing.”

That’s not what many 20th century

economists would have predicted. In a

1954 speech at an American Economic

Association meeting, economist Simon

Kuznets proposed that the urbanization

that accompanies development inevita-

bly triggers a growing income gap, but

that societies become more equal as they

democratize and adopt social welfare

programs. When inequality was plotted

against income levels, Kuznets maintained,

the relationship looked like an inverted

U curve—first rising, then falling. He won a

Nobel Prize for his work.

But his analyses were based on data from

the United States, the United Kingdom, and

Germany in the 20th century. Kuznets him-

self cautioned that the hypothesis needed

further testing. “The Kuznets curve is a

perfect example of taking trends observed

in wealthy countries and projecting [them]

While emerging economies boom, equality goes bust Inequality spikes in developing nations around the world

SPECIAL SECTION THE SCIENCE OF INEQUALIT Y

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as universal to the world,” says Timothy

Moran, a sociologist at Stony Brook Univer-

sity in New York.

In fact, the curve’s predictions have not

held up in many countries. Initial growth

between the 1960s and 1990s in the East

Asian “tigers”—Hong Kong, Singapore,

South Korea, and Taiwan—did not yield a

larger income gap. In other industrialized

countries such as the United States, mean-

while, inequality is now rising, not falling.

A wave of longitudinal studies tracking

income and other metrics has helped flesh

out the picture in developing countries like

Indonesia, South Africa, India, and China.

Those studies reveal growing inequality,

which itself may stymie further growth, be-

cause poor people without access to good

education cannot contribute to economies

to their full potential.

But a tour of emerging economies also

shows that cultural factors influence how

governments react, and whether citizens ac-

cept what seems to be an inevitable march

toward greater inequality, or protest it.

INDIA: HOW UNEQUAL? India illustrates

the daunting task of measuring income and

wealth in emerging economies. Half of all

households get some income from agri-

culture, and most receive income from more

than one source. A farmer might collect

wages or receive payments from a cousin

in the city, while a wage earner might also

keep farm animals. To capture all earnings,

surveyors for the national India Human De-

velopment Survey—which examines 41,554

households across the country—personally

ask participants about 50 separate indica-

tors of income.

This herculean labor pays off, says

Vanneman, a principal investigator on the

survey, which is jointly administered by the

University of Maryland and the National

Council of Applied Economic Research in

New Delhi. For example, one previously elu-

sive indicator for India was the Gini coeffi-

cient, a common index of income inequality

ranging from 0, in which everyone makes

the same income, to 1, in which a single rich

person would get a country’s entire income.

Government surveys based on expenditures

and excluding income data had found fig-

ures in the 0.30s—below the level in the

United States of 0.40. Such figures sparked

“disbelief” among scholars, Vanneman

notes: “Anybody who walks the streets of In-

dia cannot believe that inequality in India is

as low as the common statistics suggest.”

In 2010, the Indian survey found a Gini

coefficient of 0.52—close to China’s, which

scholars most recently estimated at 0.55.

At a time when attention is focused on in-

equality in the developed world, that’s a

sharp reminder that the worst inequalities

are often in emerging economies (see map,

pp. 820–821). Inequality in high-income

countries “still falls well below levels found

in low- and middle-income countries,”

Vanneman notes.

CHINA: SURFING A RISING TIDE. In Chi-

na, the market reforms of the past few

decades have yielded some spectacular suc-

cesses, giving rise to the lucky billionaires

and also lifting the standard of living for

the middle class. Between 2004 and 2009,

the percentage of Chinese owning color TVs

shot up from 80% to 96% and the percent-

age owning refrigerators swelled from 37%

to 54%, according to surveys by sociologist

Martin Whyte of Harvard University and

colleagues at Peking University’s Research

Center for Contemporary China.

Even so, the middle classes in China or

India are “still rather poor within global

comparisons,” Moran cautions. And the

dramatic boost in inequality in China

now presents a powerful challenge to the

Kuznets curve. In a paper published online

last month in the Proceedings of the Na-

tional Academy of Sciences, sociologists Yu

Xie and Xiang Zhou, both of the University

of Michigan, Ann Arbor, plot China’s ris-

ing income inequality, represented by the

average Gini coefficients found by seven

independent household surveys, against a

Kuznets curve.

Laborers work on new construction in

the booming city of Chongqing, China.

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SPECIAL SECTION THE SCIENCE OF INEQUALIT Y

In 1980, after the storms of the Cultural

Revolution, China was well below the level

of inequality predicted by the curve, with

a Gini coefficient of merely 0.28. But in

2002, the country’s Gini intersected the

curve and then shot beyond it, Xie and

Zhou found (see graph). The relationship

between inequality and development in

China looks more like a straight diago-

nal line than an inverted U, with no sign

of flattening. Fearing a backlash, Chinese

officials have suppressed publication of

the Gini coefficient (Science, 31 May 2013,

p. 1037) and challenged estimates of it that

they consider high.

But in fact Chinese appear remarkably

tolerant of income gaps. The 2004 round of

the survey by Whyte and colleagues polled

3267 Chinese on their attitudes as well as

their income. Although respondents valued

equality and believed the na-

tional income gap was excessive,

only 30% supported redistribut-

ing wealth from rich to poor.

Asked why people are poor, 61%

said a lack of ability was an im-

portant cause, far higher than in

any other country.

In the next round of the sur-

vey, done in 2009, the research-

ers found that despite the rising

Gini, even fewer respondents

viewed existing inequality as ex-

cessive. The findings challenge

the notion that “rising income

gaps are a major, or even the

primary, threat to social order

and political stability in China,”

Whyte says. In a separate study,

Xie, who also directs the Center

for Social Research at Peking

University, found that Chinese

largely believe Deng’s assertion

that development and inequal-

ity are necessarily linked—even

though economists have mostly

disproven that statement.

In 2006, Xie and colleagues

polled residents in six prov-

inces, asking them to separately rate levels

of development and inequality in five coun-

tries: Brazil, China, Japan, Pakistan, and

the United States. For level of development,

respondents came up with rankings that

closely mirrored U.N. estimates. But their

guesses for inequality were way off. In-

stead of corresponding to Gini coefficients

for the various countries, respondents be-

lieved that the most developed countries

have the greatest inequality. Thus, many

Chinese view inequality as the price of

economic growth and accept it “as a fact

of life,” Xie says. “That’s why there’s not

as much resentment.”

SOUTH AFRICA: ECHOES OF APARTHEID.

Halfway around the world from China,

South Africa faces similar economic chal-

lenges, but has a very different response,

perhaps because the countries’ starting

points were so different. For decades under

apartheid, black South Africans faced dis-

criminatory barriers to mobility. As those

barriers fell after 1994, expectations for a

more level playing field soared. “This is the

new South Africa,” says Murray Leibbrandt,

an economist at the University of Cape

Town and a principal investigator on the

South African National Income Dynamics

Study. “There was almost this irrationality

that things were going to be much better

moving forward.”

By some measures, things did get better:

As in China, absolute mobility rose, and

most people are better off economically

than they were 20 years ago. The share

of people living below the poverty line—

defined as $60 a month—fell from 57% in

2006 to 46% in 2011. Some expected re-

shuffling occurred, as skilled black Africans

moved up the ladder and low-skilled whites

moved down.

But despite significant investment in edu-

cation and a government vocally committed

to fighting inequality, whites continued to

earn more than blacks, and income became

more concentrated in the top 10th. Between

1993 and 2008, overall income inequality

actually increased, with the country’s Gini

coefficient rising from an already high 0.66

to a staggering 0.70, one of the highest in

the world. Demand for highly skilled work-

ers at the top increased, while black citizens

at the bottom, burdened with poor educa-

tion and health, remained relatively worse

off. “The disadvantages of apartheid just

linger,” Leibbrandt says.

South Africans may be less accepting of

inequality than the Chinese. In the past

5 years, millions of South Africans have

taken to the streets to protest everything

from high crime rates to a lack of afford-

able housing. About 91% say income dif-

ferences are too large, and two-thirds say

the country is going in the wrong direction,

according to the South African Social Atti-

tudes Survey.

And yet, the hopefulness that dominated

post-apartheid has not yet died. The survey

also found that 42% of respondents believe

that life will improve over the

next 5 years. Given trends in

absolute mobility, they are

probably right.

LATIN AMERICA: SEEKING

THE SWEET SPOT. In Latin

America, as in South Africa, a

colonial past primed nations for

inequality. Institutions estab-

lished by colonial govern-

ments allowed elites to

consolidate power and ex-

cluded indigenous and

black populations from land

ownership, education, and

politics. Thus, the region has

historically had very high

Ginis: 0.59 for Brazil in 1998

and 0.55 for Mexico in 1996,

according to a recent working

paper from the World Bank.

Added to this historically

large gap between rich and

poor is the fact that people

born poor tend to stay poor.

In Mexico, children of manag-

ers are a whopping 15.6 times

more likely to hold on to their

class status than to change it, according

to data from the Mexican Social Mobility

Surveys. Those are “near caste-like con-

ditions,” wrote sociologist David Grusky

of Stanford University in California and

colleagues in a working paper last fall. In

the United States, by contrast, children of

managers are only 2.3 times more likely to

end up in the same class. In every category

except farming, Mexicans are less mobile

than Americans. New York University soci-

ologist Florencia Torche has found a simi-

lar lack of social mobility in Chile.

Nevertheless, the gulf between income

classes in Latin America has gradually nar-

2005

Inequality and growth in China Gini coefcient

0.7

0.6

0.5

0.4

0.3

0.2

5.5 6.5 7.5 8.5 9.5 10.5 11.5

2010

2010

Survey data

Estimated Kuznets curve

2007

2011

2012 2012

Source: Xie and Zhou, 2014

Gross domestic product per capita (log scale)

STRAYING FROM THE CURVE. Surveys taken during the last 10 years show that

as China continues its rapid economic growth, its inequality continues to shoot

upward, in contrast to what a Kuznets curve would predict.

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rowed, resulting in an impressive decrease

in inequality across the region. In Mexico,

the Gini coefficient fell 0.07 units between

1996 and 2010, to 0.48. In Brazil, the Gini

coefficient dropped 0.05 units from 1998 to

2009, to 0.54. Throughout the 2000s, Ginis

fell in 13 of 17 Latin America countries for

which the World Bank has reliable data.

So although the region is still battling

inequality, such countries are now at

something of a sweet spot, says Timothy

Smeeding, an economist at the University

of Wisconsin, Madison: As with the Asian

“tigers” before them, the economy is grow-

ing, while inequality is falling. Even if it

remains hard for people to move up rela-

tive to each other, many people are better

off than before because absolute mobility

is rising.

GROWTH FOR ALL. Policy measures helped

achieve such “pro-equity growth,” and

scholars from countries like South Africa

are studying how it was done. For example,

the Brazilian government used grants to

boost education. Average years of school-

ing shot up even among the poor. So when

strong economic growth hit in the 1990s,

marginalized citizens could get better jobs.

From 2002 to 2009, the income of the bot-

tom 10% grew at almost 7% a year, while

that of the wealthiest 10% inched up by only

1.1% a year. The lesson for other develop-

ing nations, Leibbrandt notes, is the im-

portance of job creation: Improvements in

education and health may be good on their

own, but they “don’t narrow the income dis-

tribution until you get some feedback into

the labor market.”

Bucking theories put forward by propo-

nents of the Kuznets curve, research now

suggests that inequality may be a trap

for developing countries. Far from boost-

ing development, a large income gap can

slow growth and stymie poverty reduction

(see p. 851). In an entirely equal society, an

increase in gross domestic product ben-

efits everyone to the same degree, explains

J. Humberto Lopez, an economist in the

World Bank’s Latin America and Caribbean

region. In an unequal one, those at the top

accumulate more income, leaving fewer

dollars to boost households at the bot-

tom. So to achieve the same reduction in

poverty, highly unequal Brazil now needs

to grow at least twice as much as a more

equal country like Poland.

Growth suffers as well; in unequal societ-

ies, talented people born into poverty have

fewer opportunities to contribute. “It’s a

perfect storm,” Lopez says. “High inequal-

ity is bad for poverty, high inequality is bad

for poverty reduction, and high inequality

is not good for growth.”

From Latin America’s success at easing

this trap and other cases, one thing now

seems certain: Where inequality does de-

cline, government involvement is key. With-

out substantial improvements in education

and the social welfare system, “it’s not nat-

ural” that inequality falls on its own, says

Gan Li, an economist at Texas A&M Univer-

sity, College Station, and the Southwestern

University of Finance and Economics in

Chengdu, China.

In China, now that Deng Xiaoping’s pre-

diction about some getting rich first has

come true, economists hope it, too, will

adopt a more “pro-poor” strategy.

Over the past decade, China has boosted

investment in social welfare programs, but

it hasn’t yet reached the spending necessary

to begin leveling the playing field, Gan says.

“China is at a crossroads,” he says. The gov-

ernment could follow the status quo, or it

could “follow many other successful coun-

tries’ paths—and change the system.” ■PH O

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An elderly man holds out his begging cup

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