Kuznets's Inverted-U Hypothesis: Evidence from a Highly Developed country

Ram, Rati
April 1991
Southern Economic Journal;Apr91, Vol. 57 Issue 4, p1112
Academic Journal
The main theme pursued in this work is to model the relation between income inequality and economic growth in terms of Kuznets's hypothesis, and to make yet another empirical assessment of the model. The point of departure of the work from previous studies is the use of good data that span about half a century and pertain to a highly developed country. Estimates of the usual Kuznets-type quadratic equation from time-series observations for a 42-year period for the United States and cross-sections of U.S. states for 1949, 1959, 1969 and 1979 do not show the predicted structure, and also indicate absence of a monotonic decline in inequality even at such a high development level. On the contrary, a fairly pervasive uninverted U-shaped pattern of initial decline and subsequent increase in inequality is observed. One could perhaps rationalize the observed pattern by treating it as a "short run" or "local" departure from the long-run Kuznets-curve. Even then, however, it is obvious that such departures are quite substantial and can last several decades. Methodologically, two points are noted. First, results in Table I from Gini coefficient and Bourguignon's L are almost identical. Second, a comparison of the estimates in Table I and Table II suggests that while the broad pattern revealed by the estimates from time-series observations is similar to that indicated by cross-section data, there are some significant differences. In particular, the (uninverted) U-curve structure appears much sharper in time-series observations and the turning point lies near the middle of the period.


Related Articles

  • Why Does Redistribution Not Shrink When Equality Is High? Groemling, Michael // Intereconomics;Jul/Aug2002, Vol. 37 Issue 4, p204 

    Discusses the relationship between the extent of inequality and the amount of redistribution in high-income countries. Economic growth; Taxation; National debt; Determination of redistribution by regulations.

  • Intra-Southeast Asian Income Convergence. Park, Donghyun // ASEAN Economic Bulletin;Dec2000, Vol. 17 Issue 3, p285 

    The next challenge for ASEAN, which has been a successful and effective forum for political co-operation among Southeast Asian countries, is to promote greater economic co-operation. Income convergence helps to promote economic integration in the long run. This article examines the issue of...

  • The existence of a two-class economy in a general Cambridge model of growth and distribution. Fazi, Elido; Salvadori, Neri // Cambridge Journal of Economics;Jun85, Vol. 9 Issue 2, p155 

    Explores the Cambridge theory of income distribution. Discussion on the model for economic growth; Evaluation on reswitching and capital reversing debate; Assumption on the rate of profit equals to the rate of interest.

  • Economic development and income distribution in Japan: An assessment of the Kuznets hypothesis. Minami, Ryoshin // Cambridge Journal of Economics;Jan1998, Vol. 22 Issue 1, p39 

    Presents a study in relation to the Kuznets hypothesis in the economic development and income distribution in Japan. Information on national personal income tax data; Reference to income distribution in pre-war Japan; Results from the study.

  • A Positive Theory of Optimal Personal Income Distribution and Growth. Bl├╝mle, Gerold; Sell, Friedrich L. // Atlantic Economic Journal;Dec98, Vol. 26 Issue 4, p331 

    Discusses the positive theory on how income distribution and economic growth are jointly determined in political equilibrium. Information on the model; How inequality in personal income distribution gives incentives to income generation; Information the simultaneous optimization of equity and...

  • Inequality is unjust - it is not bad for growth. Giles, Chris // Australian Financial Review (0404-2018);8/20/2015, p25 

    The article presents the author's comments on pros and cons of disparity of income and argues that the virtue of providing rewards for effort and generating economic growth must be balanced against the vice of inequality's manifest injustice.

  • Economic growth and equity: Complements or opposites? Harris, Donald J. // Review of Black Political Economy;Winter93, Vol. 21 Issue 3, p65 

    Presents historical evidence for different countries suggesting the lack of an automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Cases of underdeveloped countries; Simon Kuznet's hypothesis regarding a tendency to increased income inequality in the...

  • Explaining the changes of income distribution in China. Xu, Lixin Colin; Zou, Heng-fu // China Economic Review (1043951X);2000, Vol. 11 Issue 2, p149 

    China has experienced one of the most remarkable increases in inequality over the last decade: the Gini coefficient increasing from 25.7 in 1984 to 37.8 in 1992. Using the recent developments in the theory of income distribution [J. Polit. Econ. 101 (1993) 274; Rev. Econ. Stud. 60 (1993) 35.]...

  • Rethinking the Southeast Asian Development Model. Higgott, Richard A.; Nesadurai, Helen E. S. // ASEAN Economic Bulletin;Apr2002, Vol. 19 Issue 1, p27 

    Argues that the Southeast Asian development model (SEADM) reflected an overwhelming emphasis on growth as a goal while neglecting issues of equity and justice. Markets as political constructs; Assessment of the performance of the SEADM during the 1990s; Disparities of the SEADM in income and...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics