Economic Research Forum (ERF)

Is the Middle East the world’s most unequal region?

Survey-based estimates suggest that inequality in Middle Eastern countries is not particularly high by historical and international standards. This column reports research that combines household surveys, national accounts, income tax data and rich lists to produce the first estimates of income inequality at the regional level. The results suggest that the Middle East is the most unequal region in the world.

In a nutshell

The Middle East appears to be the world’s most unequal region, with a top 10% income share greater than 60% of total regional income, compared with 36% in Western Europe, 47% in the United States and 55% in Brazil.

This extreme level of inequality is due to both enormous inequalities between countries, particularly between oil-rich and population-rich countries, and large inequality within countries.

These alarming results emphasise the need to develop mechanisms of regional redistribution and to increase transparency on income and wealth data.

In recent decades, the Middle East has been the scene of dramatic political events: wars, invasions, revolutions and various attempts to redraw the regional political map. Given this context, several studies question the link between this political turmoil and the structure and level of socio-economic inequality in the region.

Yet survey-based estimates suggest that inequality in Middle Eastern countries is not particularly high by historical and international standards and that the source of dissatisfaction might lie elsewhere (Bibi and Nabli, 2010). This somewhat surprising fact has been described as the ‘Arab inequality puzzle’ (World Bank, 2015; see also Khalid Abu Ismail’s column here on The Forum for a review of studies of the puzzle).

In a new study (Alvaredo et al, 2017), we attempt to explain this puzzle in two ways. First, we change the level of analysis and study inequality in the Middle East as a whole, as perceptions about inequality may be determined not only by within-country inequality. (For our analysis, the Middle East comprises Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, Turkey, the United Arab Emirates and Yemen).

The choice to study inequality at the regional level is motivated by three concerns:

  • The scarcity of survey data at the national level, which limits an in-depth analysis at the country level.
  • The relatively large degree of cultural, linguistic and religious homogeneity, at least compared with other regions in the world.
  • The need to go beyond the concept of the nation-state to understand inequality patterns and dynamics.

Second, we argue that until recently, available data were insufficient to measure inequality properly. Survey data, which notoriously suffer from top coding, underreporting and truncations problems, must be complemented by other data sources, as fiscal data, to produce reliable inequality statistics.

We therefore apply the new methodology developed in Alvaredo et al (2016) and create ‘distributional national accounts’ for the Middle East – that is, inequality distributional micro-files that match macro aggregates, as measured by national accounts. To do so, we combine household surveys, national accounts, income tax data and rich lists in a systematic manner to produce the first estimates of income inequality at the regional level.

More precisely, we use the first fiscal data available in the region (from Lebanon, analysed in Assouad, 2017), survey micro-data harmonised and published by ERF’s ‘Open Access of Micro-data Initiative’ and new generalised Pareto interpolation techniques (Blanchet et al, 2017), which enable us to analyse income tabulations with few information. We follow the ‘distributional national accounts’ guidelines to produce estimates consistent with national accounts figures.

We find that the Middle East appears to be the most unequal region in the world.

Extreme inequality between and within countries

According to our benchmark estimates, the share of total income accruing to the top 10% income earners is about 61% in the Middle East, which compares with 36% in Western Europe and 47% in the United States and 55% in Brazil (see Figure 1). The only country for which we find slightly higher inequality estimates is South Africa, with 62% for the top decile for recent years.

Furthermore, and as in other extremely unequal regions, the Middle East is characterised by a dual social structure. There is an extremely rich group at the top, whose income levels are broadly comparable to their counterparts in high-income countries, and a much poorer mass of the population left with little income (see Figure 2; and Assouad et al, 2018).

This structure reflects the absence of a broad ‘middle class’, as the middle 40% of the income distribution is left with far less income than the top 10% in the middle (while it receives much more in Western Europe, and only a bit less in the United States).

The origins of extreme inequality in these different groups of countries are different. In the Middle East, it is largely due to the geography of oil ownership and the transformation of oil revenues into permanent financial endowments. This translates into a major gap in average income between Gulf countries and other countries, which drives our results. As an example, in 2016, Gulf countries gathered 15% of the total regional population but received almost half of the total income.

In contrast, extreme inequality in South Africa is related to the legacy of the apartheid system: until the early 1990s, only the white minority (about 10% of the population, which until today roughly corresponds to the top 10% income group) had full mobility and ownership rights. In Brazil, the legacy of racial inequality also plays an important role: it was the last major country to abolish slavery in 1887, at a time when slaves made up about 30% of the population.

Our results are also driven by large within-country inequality. But our ability to measure it properly is still severely limited, given the low quality of available sources and the lack of fiscal data. The problem is particularly acute in the Gulf countries, where survey data do not capture well the growing share of the migrant population, a large majority of which is composed of low-paid workers living in difficult conditions and receiving much less income than nationals.

Survey data in the Gulf countries only cover 20-30% of total national income. To the extent that nationals benefit from the excluded income components (which typically refer to the undistributed profits of oil corporations and the accumulated capital income of sovereign wealth funds) more than foreigners, we also present alternative specifications, which attribute half of missing income to the nationals and the rest proportionally to the entire population. This leads to a top regional decile closer to 70% of total income.


The extreme concentration of income at the regional level highlights the need to increase pro-poor investments in health, education and infrastructure, and to develop mechanisms of regional redistribution. Such mechanisms already exist, but they should be implemented more systematically.

In addition, the tax systems of most countries in the region rely overwhelmingly on regressive indirect taxes, with only a few components comprising direct progressive taxes. In particular, it is striking to observe the near absence of a progressive inheritance tax regime in most countries of the region. Yet this is a historically powerful tool for limiting the persistence of extreme income inequality levels and to finance welfare services.

Finally, while we believe that our estimates are more robust than survey-based official inequality statistics, we stress that access to more and better data is critical in the Middle East, where a lack of transparency raises the problem of democratic accountability, independently of the actual level of inequality observed.

Further reading

Alvaredo, F, L Assouad and T Piketty (2017) ‘Measuring Inequality in the Middle East, 1990-2016: The World’s Most Unequal Region?’, Working Paper No. 2017/15.

Alvaredo, F, AB Atkinson, L Chancel, T Piketty, E Saez and G Zucman (2016) ‘Distributional National Accounts (DINA) Guidelines: Concepts and Methods used in the World Wealth and Income Database’, Working Paper No. 2016/1.

Assouad, L (2017) ‘Rethinking the Lebanese Economic Miracle: The Extreme Concentration of Income and Wealth in Lebanon, 2005-2014’, Working Paper No. 2016/13.

Assouad, L, L Chancel and M Morgan (2018) ‘Extreme Inequality: Evidence from Brazil, India, the Middle East and South Africa’, American Economic Association P&P.

Bibi, S, and MK Nabli (2010) ‘Equity and Inequality in the Arab Region’, ERF Policy Research Report No. 33.

Blanchet, T, J Fournier and T Piketty (2017) ‘Generalized Pareto Curves: Theory and Applications to Income and Wealth Tax Data for France and the United States, 1800-2014’, Working Paper No. 2017/3.

World Bank (2015) ‘Inequality, Uprisings, and Conflict in the Arab World’, World Bank and Middle East and North Africa Region; MENA Economic Monitor.

Image Source: Kyoto Review of Southeast Asia

Most read

Why the West got rich and the Middle East did not

Today’s rulers of the three largest Middle Eastern economies all look to religious authorities as a key source of legitimacy. Drawing on a broad sweep of historical analysis, this column explores what this might mean for the region’s economic future. One notable danger is that the types of people who would push for policies that promote long-run growth are excluded from the political bargaining table.

Why Turkish growth ended

Following a period of rapid economic growth, the Turkish economy has slowed significantly since 2007. This column argues that these economic ups and downs reflect institutional improvements in the aftermath of the country’s 2001 financial crisis, followed by an ominous slide in the quality of these economic and political institutions.

Implications of the current low oil prices for MENA countries

The current low oil price environment, in part driven by the US shale oil revolution, has important macroeconomic implications for the Middle East and North Africa (MENA). This column reports research evidence on its likely impact on both oil-exporting and oil-importing countries in the region.

Prospects for development with democracy in the Arab world

What are the prospects for democracy in the Arab world? This column expresses the hope that as conflict-afflicted countries embark on their programmes of economic reconstruction, autocratic institutions will not be re-established under the pretext of the need for a speedy and steady recovery. The optimal path of development necessarily includes robust growth, equity as well as democracy.

An agenda for reducing income inequality in the Arab countries

What can be done to reduce income inequality in Arab countries? This column explores issues of measurement as well as potential policy measures. It concludes by calling for a new multipurpose pan-Arab survey that would allow for an evidence-based decision-making process on the impact of proposed policies on poverty and inequality.

The United Arab Emirates’ dilemma

As energy-producing economies strive to reduce their reliance on oil revenues, they must strike a balance between the competing demands of fiscal sustainability and steady growth of the non-energy sector. This column outlines how the United Arab Emirates is addressing this challenge.

Freedom for women is crucial for economic progress in MENA

The Middle East was once the cradle of civilisation: can it prosper once again? Looking back at lessons from the European Enlightenment, this column argues that if the region wants to advance economically, it needs to advance in terms of its treatment of women. Female agency is central to understanding the West’s technological leadership of the past two centuries.

Inequality in higher education: Egypt, Jordan and Tunisia

Attainment of higher education is strikingly unequal in Egypt and Tunisia, and a little less so in Jordan. This column reports research showing that in all three countries, family background is the primary driver of inequality. Particularly in Egypt and Tunisia, public spending on higher education is regressive, with the result that what purports to be a meritocratic and equitable system in reality perpetuates inequality.

Oil exporters’ responses to the US fracking boom

What are the implications of low oil prices for the economic and political stability of Arab oil-exporting countries such as Saudi Arabia? This column explores the impact of the US fracking boom on Arab oil revenues – and how policy-makers in these countries should respond.

Pension reform that avoids harming MENA labour markets

To tackle the deficits in their pension systems, should governments in Arab countries raise social security contributions, reduce pension levels or increase the statutory retirement age? This column summarises the results of research assessing the costs and benefits of different pension reforms in terms of their impact on different generations and on the labour market.