Between 1990 and 2010, income inequality in developing countries rose 11 percent.
Inequality is perceived as a considerable threat to human development because it reflects unbalanced
economic opportunities and affect individual’s well-being. The 2014 UNHDR indicates that twothirds
of the world’s population are estimated to receive less than 13 percent of world income, while
the richest 1 percent received nearly 15 percent of world income. In the Malaysian scenario the
income inequality has improved only marginally. In 17 years from 1992 to 2009, the ratio of the mean
income of the top 20 percent to the bottom 40 percent has improved slightly from 7.4 percent to 6.9
percent. Income inequality in Malaysia can be accessed using two measures; the income quintile (top
20 per cent, middle 40 per cent and bottom 40 per cent) and Gini Coefficient. While both measures
are computed and updated regularly by EPU (Economic Planning Unit) for the whole country, the
same are not done for individual states in Malaysia. The objective of this paper is to examine income
inequality in the Northern States by using income quintile approach. Income quintiles are divided into
three categories: top 20 percent, middle 40 percent, and bottom 40 percent. The 2009 household
income survey reveals that the mean income of the top 20 percent, middle 40 percent, and bottom 40
percent are, RM 7,639, RM 2,862, and RM 1,206 respectively. A big proportion of the Northern
States income is concentrated among the top 20 percent of the population. To further understand the
situation, analysis by states, strata, and ethnicity is carried out. An interesting finding to note is that
Perlis, the poorest state among the group has the highest inequality because a big proportion of the
income goes to the richest 20 percent of its population. Rural areas and Bumiputera remain the
disadvantaged groups with low mean income