economies. This has been characterized by falling demand for occupations that previously occupied “the middle” of the wage distribution (see e.g., Autor et al, 2003; Acemoglu and Autor, 2011), and thus to rising inequality. In addition, growing concentration in a number of industries has led to the rise of superstar firms and, more generally, to a greater concentration of market power in these same countries (see e.g. Eeckhout, 2021). The ensuing increase in economic (or supernormal) profits has contributed to an increase in the income share of capital, broadly understood (Barkai, 2020).

These two trends seem likely to ensure a continued interest in inequality both among mainstream academic economists and among policy makers in the countries with greatest influence in the governance of the IMF and the World Bank – the two conditions we identified above as influential in determining the degree of attention to inequality within the two institutions. Additionally, both climate change and the fact that China will soon become a contributor to rising, rather than falling, inequality between countries (as it grows past the world’s average income) are likely to keep upward pressure on global inequality as well.

All together, these powerful global trends will probably ensure that large inequalities – between and within nations – will continue to constitute one of the most pressing challenges facing both developed and developing countries for the foreseeable future. But they do not, by themselves, ensure that sufficient attention will be paid to “inequality at the bottom”. The persistence of abject deprivation in the world’s poor countries – over 700 million (almost 1.8 billion) people living in households that subsist on less than U$1.90 (U$3.20) per person per day at PPP exchange rates<sup>34</sup> – are not the focus of most of the work on economic inequality being published today. Nor are its causes. Therein lies an excellent reason why research on inequality by World Bank and IMF staff remains deeply relevant and much needed.

What that research should focus on and how it should be conducted is a matter for the excellent researchers working in the two institutions. My own view, for what it is worth, is that it should cover at least four areas, all of which already build on their comparative strengths – either at the World Bank or at the Fund.

First, a more systematic and in-depth exploration is needed of the quality and comparability of the data on incomes and consumption expenditures assembled by the Bank from national statistical offices.<sup>35</sup> Household surveys were difficult to conduct even before the COVID pandemic, and missing incomes at the top are only one of their many shortcomings. Experimental evidence has suggested that (apparently) small changes in questionnaires – e.g., in recall periods for the consumption of certain items – can make a large difference in estimates of well-being (Beegle et al., 2012). Household durable goods, like fridges and televisions, which are purchased infrequently but provide service for long periods, are valued differently in different countries. Similar differences afflict the imputation of rental service values of owner-occupied housing. The coverage and granularity of consumption items affect the extent to which expenditures by middle- and upper-income households are captured. And all of these issues are prior to the perennial matter of comparing (and sometimes combining) inequality and poverty estimates for income and consumption distributions.

> 34 These numbers are for 2018, from the World Bank’s Poverty and Inequality Platform. The year 2018 is the last year for which the Bank judges there is sufficient available data to underpin a global estimate.

> 35 Limited survey availability and poor comparability over time also hamper the measurement of the shared prosperity indicators reported, for example, in World Bank (2020).

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