Before we end this week on income and wealth inequality in the world, I would like to have in depth discussion about the role that gender plays in inequality dynamics around the world. As you know, women continue to be discriminated against in many parts of the world. And I would like to show you some statistics as to exactly what is the extent to which that's the case, and how this might be evolving into the future. First of all, let me start by sharing with you the concept of patriarchy, which I think is really important for understanding gender dynamics in the world. Patriarchy is a social system in which males own or control property, occupy the most important economic, political and moral roles, and have authority over women and children. Some anthropologists suggest that patriarchy spread around the world beginning 6,000 years ago with the transition from hunter-gatherer to agricultural society. Some argue that today patriarchy is on the retreat, but is that really true? Well, let's take a look at some numbers here. First, let's consider something very basic, which is the extent to which women are discriminated against around the world in terms of the laws and regulations. The World Bank conducted a study a few years ago and they found that in 45 out of 128 countries that they studied, women did not have the same legal capacity to act or to engage in economic transactions in 45 out of 128 countries. They also found that in 49 out of those 128 countries, women could not work in all industries. In other words, there were certain parts of the economy that were closed to women. And they also found that 32 out of those 128 countries, were places in which women did not have equal inheritance rights. That is to say, that males were privileged when it came to inheriting the families wealth. Now, when it comes to gender inequality in wages, we find evidence of it in many countries around the world. And of course, we have to keep in mind that at least part of it is driven by job segregation, that is to say, that men and women are not equally represented in different occupations. And women tend to work in occupations in which wages are lower. Significantly, large differences persist also within occupational groups and positions even after controlling for education and experience. That is to say that above and beyond job segregation, we continue to see in the world, inequality in wages between men and women within occupational groups. And even after accounting for differences in education or in job experience. Then we have the whole concept of the mommy penalty. That is to say, that women, when they have children, they tend to either abandon their job or to work part time. And of course, that also leads to career progression interaction, that is to say, women get promoted at a slower rate than men. It is also important to keep in mind, regarding this topic, that poverty rates among female headed households are much higher than among households that are headed by a man. Let's also examine gender inequality in wealth, not in income, but in wealth. And we know that historically, it has been driven by low female labor force participation rates, that is to say, women would stay at home. And of course, in so doing, they wouldn't be remunerated explicitly for the job, for the work that they do in the household. Gender inequality in wealth historically has also been driven by gender discrimination in pay, and by patrilineal inheritance rules. That is to say, by privileging the sons over the daughters when it comes to inheriting property. Nowadays, the gap still exists, but it is narrowing due to two very important trends. First, is that women are more likely today than 20 or 50 or 100 years ago, to participate in the labor force. And also something that we haven't discussed so far in this class, but it's really important, which is that when it comes to life expectancy, women tend to have on average, a longer life expectancy than men. And keep in mind that, this has a big effect on the accumulation of wealth. Because most of the wealth in the world is owned by people above the age of 50. So if women live considerably longer, by about seven or eight years longer on average than men in the world, that means that they have more time to work, more time to invest their savings and obtain returns on them. But also more important, they are more likely to inherit from their husbands or from other people. Let's take a look at the numbers here. These numbers come from surveys conducted by various investment banks over the years. As to a very, very specific instance of wealth accumulation in the world, which is the so called high net worth individuals. The high net worth individuals are those who have at least $1 million of investable assets, excluding their primary residence, and also excluding collectibles, and consumables, and consumer durables. So let's say, the high net worth individuals are those who have a lot of savings in the bank, or they have mutual funds, or they have pension funds, or they have second homes or third homes. All of those assets count towards these statistics. So we've drawn the line at $1 million, so we can call these people millionaires. Now, for married couples, these statistics separate the wealth and allocate it to the husband and the wife, depending on their jobs and depending whether they inherited wealth from their parents or other people. Here what we see on the first chart, is the evolution in the number of millionaires in the world. Between the year 2007 and the year 2015. Very clear we're measuring this number in millions of individuals. What we can see is that first, there was a decline due, of course, to the global financial crisis. And since the year 2008, there's been a rapid increase in the number of people in the world who qualify as millionaires. In fact, when compared to the year 2008, we had at the end of 2015, almost twice as many millionaires in the world. A number that was very quickly approaching 16 million people. Now, in terms of the regional distribution of these millionaires of the world, I think there are few surprises. The three biggest regions in terms of the numbers of the millionaires are North America, including the US and Canada, Asia Pacific and Europe. And then after that come Latin America, the Middle East and Africa with smaller but still significant numbers of millionaires. Now, let's take a look in the following chart, at how much money are we talking about here? So in other words, what is the combined wealth of all of the millionaires of world? We have the same time period. It starts in 2007 and ends in the year 2015. But now vertically, we're measuring money, not individuals, and we're measuring the combined wealth of all of those millionaires in the world. The unit is trillion of US dollars. So in other words, it's a 1 followed by 12 zeroes, and we see the same trend. An initial decline, because of the global financial crisis. But since the year 2008, a very rapid increase to the point that by the year 2015, the combined wealth of all of the millionaires of the world was almost twice as big as that back in the year 2008. And was approaching about $60 trillion, which is a very large amount of money, once again controlled by the 20 million or so individuals in the world who are millionaires. Once again what we see in terms of the regional distribution, is that North America, Asia Pacific and Europe account for most of this wealth. But there is one important difference between this chart and the previous one, which is that we see that Latin America actually has a bigger share than it had in terms of individual. So it essentially means that the average millionaire in Latin America is much richer than the average millionaire in the world. Something that is consistent with the evidence that, income and wealth inequality in general in Latin America, is the highest in the world, even higher than in Africa or the Middle East. Now, let's take a look at specific numbers here. Here, I'm showing just the last five years. And is the number high net worth individuals, people whom I'm referring to as millionaires. We see that the country in the world with the largest number of millionaires is the United States with 4.4 million people who are millionaires. Followed by Japan, Germany, China and the UK. But you can tell from this table that most of the millionaires in the world live in one of ten or so countries, so they're very concentrated geographically. They tend to be rich countries that are large, or countries that are getting richer, like China and India and that are also large. Let me also share with you two other bits of information that I think are very relevant to our analysis of gender and wealth in the world. The first is how is wealth in the world distributed by age? I already mentioned to you that most wealth in the world is owned by people above the age of 50, and this chart over here gives you the evidence. Vertically, what we have is what percentage of the wealth in the world, or the different parts in the world, is accounted for by different age groups? First we have, in the first two bars to the left, we have the situation for the world as a whole in the year 2008, and then for the year 2010, also for the entire world. Now what we can see, is that most of the wealth is in fact owned by people about the age of 50 or 55. And then when we take a look at the breakdown for different regions or parts of the world, we see a very similar pattern except for in Japan and in Asia Pacific, excluding Japan. In Japan, relatively younger people, tend to have more wealth, but it's very clear to the case in Asian Pacific, which is the third bar from the left. This is mostly the result of what's going on in China. And what we see is that there is a very large proportion of the population, nearly 40%, which is under the age of 45, and owns a very large proportion of the wealth in that country. So in other words, the average millionaire in Asia Pacific, especially in a place like China, tends to be younger than the average millionaire in other parts of the world. But overall, what I want to emphasize, is that typically in the world today, millionaires tend to be people above the age of 50 and the reason for that is quite simple. Unless you make it very big by launching a company such as Facebook when you're 21, it takes a long period of time for you to become a millionaire. If you ever do, in the sense that you have to work very hard for many years. You have to save a lot of money, and you have to invest that money very wisely. And of course, at the end, very few people qualify as millionaires. But most of those who end up being millionaires, become millionaires after many years of very hard work. Now, the second bit of information that I wanted to share with you has to do with something that we've already mentioned, which is that women in general tend to out live men. Here's a chart that demonstrates that. The time period is 1950 to the year 2100. And up until the year 2015 is actual data, after the year 2015 is medium projections. The thickest line that starts at 2 shows the difference in life expectancy between females and males. And as we can see, it has been growing up until the present time. And at the present time, for the world as a whole, women on average tend to live about 4.5 years longer than men. Now, in the rich countries, which is the line at the top of the chart, the difference today is much bigger and it's about 7.5 or so years that women live longer on average than men. As you can see, the projection for the future, in the rich countries, is that the difference, or the advantage that females have over men, is going to start to disappear. Most experts attribute this decline in the difference in the advantage that women have. Due to the fact that now women work outside of a household, and they're more exposed to stress. And apparently, this is what is reducing the advantage in life expectancy on the part of women. We see a somewhat similar dynamic in the less developed and the least developed countries in the world, up until more or less the year 2005. We see that in those parts of the world, life expectancy, the female advantage has been growing, but eventually, it will also level off and start to decline. But as we speak today, and for the foreseeable future, we can safely assume that women on average will live perhaps between five and seven years longer than men, depending on the part of the world that we are considering. Now, what's the implication of this? Well, the implication of this is that for all of these reasons that we've been talking about, we know that more and more women in the world are accumulating wealth and a few of them are becoming millionaires. But look at these figures, it's really striking, this table gives us the following information. What percentage of all of the millionaires in the world, remember these are the high net worth individuals, are women? Well, back in the year 2008, 24% of all of the millionaires in the world were women. Two years later, in the year 2010, 27% of all the millionaires in the world were women. The most recent estimate that I've been able to find using the same methodology, refers to the year 2013, and in that year 40% of all the millionaires in the world were women. So I think it is safe for me to predict that within five, perhaps ten years, we will have in the world for the first time in history, more women who are millionaires, than men. So I think this photograph over here, captures what's going in the world. What's going on is that, wealth is being accumulated by people above the age of 50, primarily, and as time passes, we're seeing more and more women among that group of people who qualify as millionaires in the world. So essentially, one of the fastest growing demographics in the world is that of women above the age of 50 would have accumulated significant amounts of money. So in this second week of class, we have examined the dynamics of income and wealth inequality in the world. And I would like you to remember perhaps only one very important conclusion that I think we should reach. Which is that the answers to the question as to whether inequality is on the increase or on the decline in the world are not simple. And the factors behind the evolution of income and wealth inequality in the world are quite complex. And finally, keep also this in mind for our future analysis of various global trends around the world. What we see is that in spite of the historical discrimination against women when it came to the distribution of income and wealth. Over the last five or ten years, we've seen very, very important changes in many different parts of the world. And most of those changes indicate that now women, due to both their greater labor force participation. And their longer life expectancies, are making progress in terms of accumulating wealth, and also receiving more income in the world.