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The Gini coefficient saw sustained growth during the 19th and 20th centuries. Many of these low-wage workers live paycheck-to-paycheck and have no sick days, pension, or health insurance. In the U.S., poverty is a growing issue, where an estimated 12.3-17.8 percent below the poverty level (see Poverty Rate by Country). In 2015, the top 1% of earners in the United States averaged 40 times more income than the bottom 90%. The United States has a Gini coefficient of 41.1. Inequality is generally lower in Europe than elsewhere in the world, and the Gini coefficient offers quantifiable proof of that fact. Nordic and Central Eastern European countries dominate this list, claiming seven of the top 10 slots. Now for the good news: Top 10 Countries with the Lowest Gini Coefficients (%) - World Bank: Top 10 Countries with the Highest Gini Coefficients (%) - World Bank: Additionally, more than half of South Africa's population lives in poverty. In South Africa, the richest 10% hold 71% of the wealth, while the poorest 60% hold just 7% of the wealth. That said, in 2005, the Gini coefficient was even higher, at 65.0. South Africa ranks as the country with the lowest level of income equality in the world, thanks to a Gini coefficient of 63.0 when last measured in 2014. Countries with the highest and lowest Gini coefficients Additionally, due to limitations such as reliable GDP and income data, the Gini index may overstate income inequality and be inaccurate. A high-income country and a low-income country can have the same Gini coefficients. Some of the world's poorest countries, such as the Central African Republic, have some of the highest Gini coefficients (61.3 in this case). While the Gini coefficient is a useful tool for analyzing the wealth or income distribution in a country, it does not indicate that country's overall wealth or income.
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The cumulative income or wealth of the population is plotted on the vertical axis. The Lorenz curve plots the percentiles of the population on the graph's horizontal axis according to income or wealth, whichever is being measured. Mathematically, the Gini coefficient is defined based on the Lorenz curve. On the other hand, if one person earned all the income in a nation and the rest earned zero, the Gini coefficient would be 1 (100%). To offer two hypothetical examples, if a nation were to have absolute income equality, with every person earning the same amount, its Gini score would be 0 (0%). Explaining the Gini coefficientÄeveloped by Italian statistician Corrado Gini in 1912, the Gini coefficient ranges from 0 to 1, but is often written as a percentage. These include slower GDP growth, reduced income mobility, greater household debt, political polarization, and higher poverty rates. A country's Gini coefficient is important because it helps identify high levels of income inequality, which can have several undesirable political and economic impacts. The Gini coefficient, also called the Gini index or Gini ratio, is the most commonly used measure of income distribution-simply put, the higher the Gini coefficient, the greater the gap between the incomes of a country's richest and poorest people.