Comparison of Income distribution in Iraq with Germany, U.S.. Robert Gallagher *

The Iraqi National Economy

Cairo Conference Nov. 2015

Iraq has a degree of income equality higher than Germany and triple that of the U.S.A.

I measure degree of income equality by the ratio of the income or consumption share of the lowest income quintile of a population to that of the highest, which I designate in Table 1 as .

The finding that income inequality in Iraq is low is not particularly new. The 2011 World Bank report Confronting Poverty in Iraq says that “Inequality in living standards is extremely low in Iraq.”[i] The Gini coefficient, which measures degree of income inequality, is only 0.29. The higher the Gini coefficient, the more inequality exists in a society. Compare Iraq’s 0.29 to 0.41 for the U.S.A.

The Bank adds that “The poverty gap index is extremely low compared to most other countries.” The poverty gap index is the average gap between poor people’s living standard and the poverty line, expressed as a percentage of the poverty line, so that the deeper the poverty on average the greater the poverty gap index. In Iraq that index is 0.4, in the U.S.A. a whopping 38. The Bank goes on to say that “No country at Iraq’s level of per capita GDP has a lower level of inequality” and “virtually all countries at Iraq’s level of GDP per capita have higher levels of inequality.”[ii]

Those comments from the World Bank change the question. The interesting question is not: Does Iraq have low income inequality? But rather: Why does Iraq have low income inequality? And, what does this signify for Iraq? In brief, I claim that what this means is that there is a greater degree of reciprocity in Iraq than in the U.S. and other countries whose peoples suffer from a high degree of inequality.

 

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[i] P. 15.

[ii] P. 19.


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