Economic growth and income inequality
Опубликовано на портале: 03-12-2003
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Kuznets postulates that in the early stages of development both a country’s economic growth and its income inequality rises. For developed countries income inequality shows a tendency of narrowing. The paper offers a possible explanation for this process. It is the result of a secular shift from low-income, low-inequality agriculture to high-income, medium-inequality industrial production. This shift in itself would possibly lead to the suggested ‘inverted U’-shaped relationship between growth and inequality. Kuznets gives possible additional reasons for narrowing inequality:
1) increasing efficiency of the established urban population decreases inequality within the industrial sector.
2) The growing political power of the poor urban population results in protective and supporting legislation.
economic development economic growth economic structure income distribution income inequality inverted-U Kuznets hypothesis
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Treasury Working Papers. 2003. No. 01/13.
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