This 'Note' shows that international inequality with regard to living standards throughout the world has been diminishing since the 1980s, primarily because of the drop in absolute poverty in developing countries. In rich countries, growing income inequalities and job instability for low-skilled workers has eroded their position in society, even when redistribution has helped reduce inequalities in disposable income.

This complex diagnosis explains the widespread yet inaccurate perception that poverty and inequalities have seen an overall increase throughout the past 20 years. Although globalization has had a positive impact on a number of developing countries, it has also heightened internal inequalities. Yet it is difficult to differentiate between the influence of globalization and that of innovation-driven competition, which favours skilled workers.

This study draws on an analysis of the dynamics of inequalities to suggest that wealthy countries should rethink their policies targeting the unskilled. Improving their professional security can both reduce internal inequalities and, over the long run, curb the protectionism that hampers exports from poor countries.