The “empowerment line” is a threshold at which people can afford essential goods and services and build savings. And although higher income levels appear to correlate with better empowerment outcomes, those gains stall when countries exceed $20,000 in GPD per capita, according to senior partner Kweilin Ellingrud and colleagues. Struggling households see gains from higher incomes in wealthier countries only when they result in greater purchasing power. Wealthier economies haven’t managed to lift the last 20 percent of their populations above the empowerment line.
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A scatterplot shows the convergence of empowerment and per capita GDP in a sample of 120 countries representing ~90% of the world’s population. It seems to indicate that as wages slowly improve, the share of individual countries’ populations living above the empowerment line—which is defined as a threshold well above the international poverty line, at which people can afford standard goods and services—also increases.
Source: Oxford Economics; WageIndicator June 2022, Oct 2022, and Jan 2023 data sets; World Bank; World Data Lab; McKinsey Global Institute analysis.
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To read the article, see “A better life everyone can afford: Lifting a quarter billion people to economic empowerment,” May 20, 2024.