What happens to income distribution during the course of economic development? New
higher quality international data show a marked pattern of inequality convergence, where
inequality becomes more similar across countries as income levels rise. Inequality has
tended to fall in high inequality countries as their economies grow, and inequality has
tended to rise in low inequality countries. This is clear in linear regression trends,
piecewise trends, and stochastic kernel estimation. The stochastic kernel estimation
models the evolution of inequality in the income domain, rather than the more typical
time domain, and allows for complex dynamics. The evidence of inequality convergence is
confirmed in numerous robustness checks. The pattern of convergence is consistent with
both rising inequality in many high-income countries and falling inequality in high
inequality developing countries, such as many Latin American countries.