The Real Inequality Ranking: Where the Economic Gap Hurts Most

We talk about inequality constantly.

We measure it.

We compare countries.

We publish rankings.

And then, almost inevitably, we reduce an extraordinarily complicated economic reality to one number:

the Gini coefficient.

The Gini is useful.

But it is not enough.

A country where the richest 10% earn dramatically more than the poorest 10% can still provide strong public education, affordable healthcare, social mobility and meaningful purchasing power to the middle class.

Another country can have a smaller statistical income gap while housing is unaffordable, taxes fall disproportionately on those who cannot avoid them, university participation is weak and the economic position of children is largely determined by their parents.

Which country is really more unequal?

That is the question I want to answer.

Not ideologically.

Economically.

And to do it, we need to look beyond income.

The problem with measuring inequality

The OECD defines the Gini coefficient on a scale from zero, representing perfect equality, to one, representing maximum inequality.

It normally uses household disposable income after taxes and transfers.

That makes it an extremely useful measure of income distribution.

But it tells us nothing directly about the price of an apartment.

Nothing about the purchasing power of a salary.

Nothing about accumulated wealth.

Nothing about tax evasion.

Nothing about whether a child from a low-income family can graduate from university.

And very little about whether that child will eventually earn substantially more than his or her parents.

That is why I believe inequality should be analysed through several layers rather than one statistic.

Layer 1 — Income inequality

We begin with the traditional measure because it remains important.

The OECD’s harmonised disposable-income data show enormous differences between countries.

Among OECD and partner economies, Latin American countries generally remain toward the more unequal end of the distribution, while several Central and Northern European economies show substantially lower disposable-income inequality.

But immediately we encounter our first problem.

Two countries can have similar Gini coefficients and completely different standards of living.

So we need another variable.

Layer 2 — What does the salary actually buy?

A salary of $4,000 is not necessarily better than a salary of $3,000.

It depends where you live.

Housing.

Food.

Transport.

Energy.

Healthcare.

Education.

Childcare.

Taxes.

The OECD uses purchasing-power parities precisely because nominal currency comparisons can produce misleading conclusions.

Purchasing-power parity asks a much more useful question:

How many goods and services can that income actually purchase?

This distinction changes the inequality debate.

The important question is no longer simply:

“How much does the median household earn?”

It becomes:

“What standard of living can the median household purchase?”

That is a much better measure of economic reality.

Layer 3 — Wealth changes everything

Income is what arrives every month.

Wealth is what remains after decades.

The distinction is enormous.

Two families can earn exactly €60,000 per year.

Family A owns its home outright and has €300,000 invested.

Family B rents, has €40,000 of debt and owns almost no financial assets.

Their incomes are identical.

Their economic security is not remotely comparable.

Wealth provides something income cannot fully reproduce:

time.

A wealthy household can survive unemployment.

Finance education.

Buy property.

Start a company.

Take investment risk.

Help children with their first home.

Transfer assets to the next generation.

This is why wealth inequality is frequently much greater than income inequality.

And it is why a serious inequality analysis must include both.

Layer 4 — The tax system: who really pays?

This is one of the most underestimated dimensions of inequality.

Comparing statutory tax rates is not enough.

We need to know who actually pays them.

Imagine two citizens.

Both earn €50,000 economically.

One is a salaried employee whose income is automatically reported and taxed.

The other operates partly in the informal economy and declares €30,000.

Official statistics may describe the second person as poorer.

Economic reality may be completely different.

Tax evasion therefore creates two distortions simultaneously.

It deprives the state of revenue.

And it transfers the effective burden toward compliant taxpayers.

Latin America illustrates the magnitude of the issue.

ECLAC has estimated losses from income-tax and VAT evasion and avoidance at approximately $433 billion in 2023, equivalent to around 6.7% of regional GDP.

That is enormous.

But this is not exclusively a Latin American phenomenon.

Italy provides an important European example.

The OECD’s 2026 Economic Survey estimates that approximately €100 billion in taxes and social-security contributions were lost to evasion in 2023, around 4.7% of GDP.

Italy simultaneously has a very substantial overall tax burden.

This creates a particularly uncomfortable form of inequality:

inequality between those who can avoid the fiscal system and those who cannot.

High taxes do not automatically mean inequality

This distinction is essential.

Denmark collected taxes equivalent to 45.2% of GDP in 2024.

France collected 43.5%.

Austria 43.4%.

Mexico collected only 18.3%.

The OECD average was 34.1%. (OECD⁠)

But this does not mean Denmark is economically worse because it taxes more.

Nor does it mean Mexico is economically better because it taxes less.

The correct question is:

What does the citizen receive in exchange?

Healthcare?

Education?

Security?

Transport?

Childcare?

Pensions?

And how widely is the tax burden actually shared?

A high-tax economy with high compliance and strong services can produce a very different economic experience from a high-tax economy with substantial evasion and weaker services.

Likewise, a low-tax economy can be attractive to capital while leaving households responsible for privately purchasing services that elsewhere are publicly provided.

Therefore tax-to-GDP cannot itself measure inequality.

But fiscal effectiveness absolutely belongs in the discussion.

Layer 5 — Education: the most important inequality of all

Now we arrive at the variable I consider decisive.

Education.

Because income tells us where somebody is today.

Education helps tell us where their children may be tomorrow.

And the differences between countries are enormous.

Among 25–34-year-olds in 2025, the share with tertiary education was:

Korea: 71.1%

Canada: 67.7%

Ireland: 66.8%

Lithuania: 60.8%

Australia: 58.2%

Norway: 56.8%

Netherlands: 56.1%

Sweden: 53.6%

Belgium: 52.7%

Spain: 52.5%

Switzerland: 50.6%

Poland: 45.2%

Germany: 40.9%

Colombia: 35.5%

Costa Rica: 33.9%

Italy: 31.1%

Mexico: 29.0%. (OECD Data Explorer⁠)

Stop for a moment on Italy.

Italy is a G7 economy.

Yet only 31.1% of 25–34-year-olds in this OECD measure have tertiary education.

Spain is at 52.5%.

Canada is at 67.7%.

Korea is above 71%.

That is not merely an education statistic.

It is a future productivity statistic.

A wage statistic.

A competitiveness statistic.

And potentially a social-mobility statistic.

But university attendance is still not enough

There is another trap.

Having more graduates does not automatically guarantee social mobility.

We must ask who becomes a graduate.

This is where the numbers become uncomfortable.

In Italy, 63% of young adults aged 25–34 with at least one tertiary-educated parent obtain tertiary education themselves.

Among young adults whose parents did not complete upper-secondary education, the figure falls to just 15%.

The gap is 48 percentage points.

The OECD average gap is 44 points. (OECD⁠)

This tells us something extraordinarily important.

Education can reduce inequality.

But education can also reproduce inequality.

If the children of graduates overwhelmingly become graduates while children from poorly educated households rarely do, university is not functioning as a sufficiently powerful social elevator.

It risks becoming part of the mechanism through which advantage reproduces itself.

Korea shows the same problem from another angle

Korea has extraordinary tertiary attainment.

More than 71% of 25–34-year-olds have tertiary education. (OECD Data Explorer⁠)

Yet family background still matters.

Among young Koreans with at least one tertiary-educated parent, 85% obtain tertiary education.

Among those whose parents did not complete upper-secondary education, 45% do.

That is still a 40-point gap. (OECD⁠)

Korea therefore teaches us another lesson.

Mass university education can dramatically increase human capital without completely eliminating inherited educational advantage.

Again:

one statistic is never enough.

THE REAL INEQUALITY RANKING

So here is the ranking I believe is actually useful.

Not “which country has the richest rich people?”

Not “which country taxes the most?”

And not simply “which country has the highest Gini?”

The question is:

Where is the economic distance between people hardest to overcome?

For an internationally comparable core ranking, I would focus on countries for which reasonably harmonised OECD income, education and fiscal data allow us to avoid comparing statistical apples with oranges.

And I would divide the ranking into clear groups rather than pretend that a 6.72 score is scientifically distinguishable from 6.68.

GROUP 1 — HIGH STRUCTURAL INEQUALITY

Costa Rica
Chile
Colombia
Mexico

The common problem is not identical in every country, but the combination is difficult: relatively high income dispersion, weaker fiscal capacity than most advanced OECD economies and substantially lower tertiary attainment than the leading OECD countries.

Costa Rica has only 33.9% tertiary attainment among 25–34-year-olds.

Colombia: 35.5%.

Mexico: 29.0%. (OECD Data Explorer⁠)

Mexico also collected taxes equivalent to only 18.3% of GDP in 2024, the lowest ratio in the OECD. Chile was at 20.5%, Colombia 19.9% and Costa Rica 24.8%. (OECD⁠)

That does not prove causality.

But it describes a structural challenge:

high inequality combined with limited fiscal capacity and relatively weak tertiary penetration makes redistribution and upward mobility harder.

GROUP 2 — THE ANGLO-SAXON PARADOX

United States
United Kingdom
Canada
Australia

These economies demonstrate why the Gini cannot be our only measure.

They generally tolerate greater market-income dispersion than many continental European economies.

But they also contain deep capital markets, globally competitive universities and substantial opportunities for wealth creation.

Canada, for example, has one of the highest young-adult tertiary-attainment rates in the OECD at 67.7%.

Australia reaches 58.2%. (OECD Data Explorer⁠)

The United States presents perhaps the clearest contradiction of all:

enormous wealth creation alongside extraordinary concentration of financial assets.

A society can therefore be highly successful at producing wealth while remaining much less successful at distributing ownership of that wealth.

Those are different achievements.

GROUP 3 — SOUTHERN EUROPE’S MIDDLE-CLASS PROBLEM

Italy
Spain
Portugal
Greece

These countries require a different interpretation.

Their problem is not Latin American-style inequality.

Nor is it American-style financial-wealth concentration alone.

The challenge increasingly concerns the economic trajectory of the middle class:

weak productivity growth;

housing pressure in major cities;

youth employment;

real wage dynamics;

ageing populations;

intergenerational transfers;

and, particularly in Italy, relatively low tertiary attainment.

Spain has moved much further than Italy educationally.

Among young adults, tertiary attainment is 52.5% in Spain against only 31.1% in Italy. (OECD Data Explorer⁠)

That 21.4-point difference between two large Southern European economies deserves far more attention than it receives.

Italy’s additional problem is fiscal.

The country combines a substantial tax burden with significant estimated tax and social-contribution evasion.

The inequality experienced by the compliant middle class therefore cannot be understood through Gini alone.

GROUP 4 — CONTINENTAL EUROPE: LOWER INEQUALITY, HIGH FISCAL COST

Germany
France
Austria
Belgium
Netherlands

These economies generally achieve substantially more income compression through taxation, transfers and social institutions.

But equality is not free.

France collected taxes equivalent to 43.5% of GDP in 2024.

Austria 43.4%.

Belgium 42.6%.

Germany 38.0%.

The Netherlands also operates within a comparatively high-revenue European fiscal model. (OECD⁠)

The question here therefore changes.

It is no longer merely:

“Does redistribution reduce inequality?”

Clearly it can.

The harder question becomes:

How much redistribution can an economy sustain without weakening incentives, investment, entrepreneurship and growth?

That is the European balancing act.

GROUP 5 — THE NORDIC MODEL

Denmark
Norway
Sweden
Finland

These countries remain essential to any inequality discussion because they demonstrate that capitalism, substantial private wealth and relatively compressed disposable-income distributions can coexist.

Their model relies on several components operating simultaneously:

high taxation;

high tax compliance;

extensive public services;

strong education;

high labour-force participation;

institutional trust;

and comparatively broad social protection.

Denmark’s tax revenue reached 45.2% of GDP in 2024, the highest level in the OECD. (OECD⁠)

But simply copying Denmark’s tax rates would not create Denmark.

This is perhaps the most important lesson.

The Nordic model is an institutional ecosystem.

High taxes work differently when tax compliance is high, institutions function and citizens receive visible services in return.

Importing only the taxation while failing to import institutional quality would reproduce the cost without necessarily reproducing the outcome.

THE RANKING IN ONE VIEW

For readers who want the conclusion without fifty economic indicators, here is the simplest interpretation:

1. Highest structural inequality challenge: Latin American OECD economies — particularly Costa Rica, Chile, Colombia and Mexico.

2. High wealth-creation but high distribution challenge: United States and, in different forms, other Anglo-Saxon economies.

3. Middle-class and intergenerational challenge: Southern Europe — particularly Italy, with weak tertiary attainment and a complicated relationship between high taxation and tax compliance.

4. Lower disposable-income inequality but high fiscal burden: Continental Western Europe.

5. Lowest structural inequality among the models examined: Nordic economies, supported by high taxation, extensive services, education and stronger institutional capacity.

This is deliberately a structural ranking.

It is not a moral ranking of countries.

And it is not a ranking of where somebody should live.

It answers one question:

How difficult is the economic distance between citizens to overcome once income distribution, education and the fiscal system are considered together?

And now the ranking changes again

There is one fascinating consequence.

If we ranked countries exclusively by income inequality, we would obtain one order.

If we ranked them by university access, another.

If we ranked them by tax burden, another.

If we ranked them by wealth concentration, another.

If we ranked them by purchasing power, another.

That is precisely why the traditional inequality debate is inadequate.

There is no single inequality.

There are several.

Inequality of income

How much more does one person earn than another?

Important.

But incomplete.

Inequality of wealth

Who owns the house, the shares, the company and the capital?

Potentially even more important.

Inequality of purchasing power

What can the salary actually buy?

Essential for understanding the middle class.

Fiscal inequality

Who actually pays the taxes?

Frequently ignored.

Educational inequality

Who obtains the qualifications that determine future earnings?

Fundamental.

Intergenerational inequality

How strongly does the economic position of parents determine the future of their children?

This may be the most important inequality of all.

The real divide is not rich versus poor

The deepest economic divide may actually be between people who possess mechanisms for accumulating advantage and those who do not.

Property.

Financial assets.

Education.

Professional networks.

Access to capital.

Inheritance.

Tax knowledge.

Geographical mobility.

These mechanisms compound.

A family that owns a house can help finance another house.

Financial assets generate additional financial assets.

Highly educated parents are more likely to produce highly educated children.

Capital creates more capital.

Knowledge creates more knowledge.

Opportunity itself compounds.

Poverty can compound too.

That is why inequality becomes persistent.

The middle class is the key

The success of an economic system should not be judged by whether billionaires exist.

Nor should it be judged by whether everybody earns approximately the same salary.

A much more interesting question is:

Can an ordinary household build capital?

Can it buy property?

Can it educate its children?

Can it survive unemployment?

Can it save?

Can it invest?

Can its children realistically become wealthier than their parents?

That is the economic function of the middle class.

A healthy capitalist system should not eliminate inequality.

It should prevent inequality from becoming permanent.

There is an enormous difference.

A country can be unequal and mobile

This distinction is crucial.

Imagine an economy where income inequality is relatively high but poor children regularly become middle-class adults and middle-class children frequently become wealthy entrepreneurs.

Now imagine a country with lower measured inequality but very little movement between social groups.

Which society offers greater opportunity?

The Gini coefficient cannot answer.

Intergenerational mobility can.

And this is where education becomes decisive.

Across OECD countries, family educational background remains strongly associated with children’s educational attainment.

The persistence of those gaps shows that even advanced economies remain far from genuine equality of opportunity.

The uncomfortable conclusion

Economic inequality is usually presented as a battle between two political ideas.

Redistribute more.

Or allow markets to operate more freely.

I think that framing is too primitive.

The real objective should be something different:

maximum economic mobility.

Allow people to become rich.

Allow entrepreneurs to accumulate capital.

Reward education.

Reward risk.

Reward innovation.

But make sure the starting line does not determine the finishing line.

That requires functioning education.

A tax system people actually pay.

Access to capital.

Affordable opportunities to accumulate assets.

Competitive markets.

Institutional credibility.

And an economy capable of generating productivity growth.

Redistribution can correct outcomes.

Education and mobility can change trajectories.

The second is ultimately more powerful.

My final ranking

If I had to summarise the entire analysis in one hierarchy, I would not rank countries according to how many rich people they have.

I would rank economic systems according to how difficult it is for somebody born without wealth to build it.

That produces a much more revealing picture.

Latin American economies remain challenged by high structural inequality, weaker fiscal capacity and lower educational penetration.

Anglo-Saxon capitalism generates enormous wealth but distributes ownership of that wealth unevenly.

Southern Europe compresses some inequalities but struggles with productivity, demographics, youth opportunity and, in Italy’s case, educational attainment.

Continental Europe achieves stronger redistribution at a substantial fiscal cost.

Nordic economies combine relatively compressed income distribution with strong education and public institutions — while requiring exceptionally high taxation and institutional trust to sustain the model.

None is perfect.

None can simply copy another.

But one conclusion survives every statistical adjustment:

The most dangerous inequality is not that somebody has more money than you.

It is that the economic system makes it increasingly difficult for your children ever to catch up.

That is the inequality governments should be measuring.

And it is the inequality economists should be talking about.

Roberto Balbino
CEO, Fintech SCB
Independent Analyst — Finance, Economics, Geopolitics & Global Markets
www.fintechscb.com