WORLD SOCIAL REPORT 2020 INEQUALITY IN A RAPIDLY CHANGING WORLD WORLD SOCIAL REPORT 2020 DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS WORLD SOCIAL REPORT 2020 INEQUALITY IN A RAPIDLY CHANGING WORLD INEQUALITY IN A RAPIDLY CHANGING WORLD I DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS The Department of Economic and Social Affairs of the United Nations Secretariat is a vital interface between global policies in the economic, social and environmental spheres and national action. The Department works in three main interlinked areas: (i) it compiles, generates and analyses a wide range of economic, social and environmental data and information on which States Members of the United Nations draw to review common problems and to take stock of policy options; (ii) it facilitates the negotiations of Member States in many intergovernmental bodies on joint courses of action to address ongoing or emerging global challenges; and (iii) it advises interested Governments on the ways and means of translating policy frameworks developed in United Nations conferences and summits into programmes at the country level and, through technical assistance, helps build national capacities. NOTE The designations employed and the presentation of the material in the present publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country or territory or of its authorities, or concerning the delimitations of its frontiers. The term “country” as used in the text of this report also refers, as appropriate, to territories or areas. The designations of country groups in the text and the tables are intended solely for statistical or analytical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. Mention of the names of firms and commercial products does not imply the endorsement of the United Nations. Symbols of United Nations documents are composed of capital letters combined with figures. ST/ESA/372 United Nations publication Sales No. E.20.IV.1 ISBN 978-92-1-130392-6 eISBN 978-92-1-004367-0 Copyright © United Nations 2020 All rights reserved II WORLD SOCIAL REPORT 2020 FOREWORD The World Social Report 2020: Inequality in a rapidly changing world comes as we confront the harsh realities of a deeply unequal global landscape. In North and South alike, mass protests have flared up, fueled by a combination of economic woes, growing inequalities and job insecurity. Income disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration and discontent across generations. The World Social Report 2020 documents deep divides within and across countries despite an era of extraordinary economic growth and widespread improvements in living standards. The report also underscores how gender, along with ethnicity, race, place of residence and socioeconomic status, continue to shape the chances people have in life. In some parts of the world, divides based on identity are becoming more pronounced. Meanwhile, gaps in newer areas, such as access to online and mobile technologies, are emerging. Unless progress accelerates, the core promise of the 2030 Agenda for Sustainable Development – to leave no one behind – will remain a still distant goal by 2030. The inequality challenge is global, and intimately connected to other pressing issues of our times: not only rapid technological change, but also the climate crisis, urbanization and migration. In many places, the growing tide of inequality could further swell under the force of these megatrends. The World Social Report 2020 sends a clear message: the future course of these complex challenges is not irreversible. Technological change, migration, urbanization and even the climate crisis can be harnessed for a more equitable and sustainable world, or they can be left to further divide us. Governments are key players in creating more equitable societies, protecting the most vulnerable from the negative effects of these trends and ensuring that their benefits as well as adaption costs are broadly and equitably shared. But, in our increasingly interconnected world, the decisions of other countries can constrain national policy-making. International cooperation is more important than ever. INEQUALITY IN A RAPIDLY CHANGING WORLD III As we enter a Decade of Action to achieve the Sustainable Development Goals, the United Nations system will be at the forefront of the fight against inequality, linking global principles and policy know-how to local action. The start of the Decade of Action coincides with the seventy-fifth anniversary of the United Nations. To mark this important occasion, we are opening a global conversation on building the future we want. In a world of dramatic global changes, I encourage people to express their views on how enhanced international cooperation can help build a fair globalization. The World Social Report 2020 frames the debate on how to curb inequality in these turbulent times. Together, we must challenge the status quo and take action to tackle deep-seated as well as emerging inequalities once and for all. António Guterres Secretary-General of the United Nations IV WORLD SOCIAL REPORT 2020 ACKNOWLEDGEMENTS The World Social Report is the flagship publication on major social development issues of the Department of Economic and Social Affairs (DESA) of the United Nations Secretariat. The 2020 report was prepared by a team managed by Wenyan Yang in the Division for Inclusive Social Development, under the guidance of Elliott Harris and Daniela Bas. The report’s core team, led by Marta Roig, included Maren Jiménez, Alex Julca, Hiroshi Kawamura, Martijn Kind, Yern Fai Lee, Jonathan Perry and Julie Pewitt. Valuable inputs were provided by other colleagues in DESA, including Astra Bonini, Clare Menozzi, Vinod Mishra and Shantanu Mukherjee. The team is grateful to Eduardo Moreno and his team at UN-Habitat for their valuable inputs to chapter 4 of the report. The analysis contained in the report is based in part on background papers prepared by independent experts Aaron Benavot and Kathleen Newland. The collection and analysis of household survey data conducted by Bin Lian was extremely important. Sabina Alkire, Corrine Mitchell and their team at the Oxford Poverty and Human Development Initiative graciously provided data on the multidimensional poverty index. The team is particularly grateful to Francisco Ferreira, Carlos Gradín, Stephane Hallegatte, Christoph Lakner, Heriberto Tapia, Narasimha Rao, Julie Rozenberg and Brian Walsh for their guidance and advice during the preparation of the report. The team would also like to thank Jeni Klugman, Jorge Rodríguez as well as those DESA colleagues who provided comments to the draft report during the formal review process. At an early stage, the team also benefited from consultations on new research on inequality with Robert Andersen, Bea Cantillon, Lucas Chancel, Miles Corak, Hai-Anh Dang, Vidya Diwakar, Anirudh Krishna, Leslie McCall, Abigail McKnight, Pippa Norris, Celine Thévenot and Stephen Younger. The report was skillfully edited by Lois Jensen. Camilo Salomon provided the cover, publication and graphics design. INEQUALITY IN A RAPIDLY CHANGING WORLD V CONTENTS Foreword II Acknowledgements III Explanatory notes XII Executive summary 2 Introduction 16 1. Inequality: where we stand today 19 Key messages 20 Introduction 21 A. Economic inequality 21 1. Income inequality across countries 22 2. Trends in economic inequality within countries 26 a. Regional trends 26 b. Labour and capital 31 c. The impact of policy 32 B. Inequality of opportunity 34 1. Group-based disadvantage, poverty and income inequality 37 2. Trends in group-based inequality 40 C. The price of inequality 44 1. Slower economic growth and poverty reduction 44 2. Limited upward mobility 46 3. Captured political processes, mistrust of institutions and growing unrest 48 D. Conclusions 52 Annex 1: Measuring economic inequality 53 Annex 2: Group-based disparities in access to electricity and sanitation 56 VI WORLD SOCIAL REPORT 2020 2. The technological revolution: winners and losers 57 Key messages 58 Introduction 59 A. Technology, employment and inequality 60 1. Labour-saving and skill-biased technologies 61 2. Share of labour in national income: impacts of labour-saving technology 63 3. Wage divergence: impacts of skill-biased technology 65 B. Current technological divides and opportunities for inclusion 71 1. Technological divides and unequal access to basic services 71 2. New technologies and financial inclusion 73 3. New technologies in other sectors 75 C. Policy considerations 78 3. Climate change: exacerbating poverty and inequality 81 Key messages 82 Introduction 83 A. Climate change through an inequality lens 84 1. Channels through which climate change exerts its effects 84 a. Livelihoods 84 b. Health and mortality 85 c. Agricultural production and food prices 86 d. Labour and economic productivity 86 2. Determinants of the uneven impacts of climate change 86 B. Unequal exposure and impacts across countries 88 C. Unequal exposure and impacts within countries 93 1. People living in poverty 93 a. Exposure 93 b. Susceptibility 94 c. Ability to cope and recover 95 INEQUALITY IN A RAPIDLY CHANGING WORLD VII 2. Other vulnerable groups 97 a. Smallholder farmers 97 b. Indigenous peoples 97 c. Rural coastal populations 98 D. Distributional effects of climate action: implications for policy 99 1. The effect of mitigation and adaptation policies on inequality 99 a. Mitigation policies 99 b. Adaptation policies 102 2. Promoting a just transition with equitable outcomes 104 a. A systems perspective 105 b. Climate action and social protection 105 4. Urbanization: Expanding opportunities but deeper divides 107 Key messages 108 Introduction 109 A. Spatial inequalities: the rural-urban divide 109 B. An increasingly urban world 114 1. Inequality within cities: economic, spatial and social dimensions 115 2. Slums: home to more than 1 billion people 119 C. Policy implications: shared prosperity or rising inequality? 122 1. Cities that work for everyone 123 2.