Kuznets curve
In his 1955 AEA address, Simon Kuznets suggested inequality rises then falls as per-capita income grows, noting the evidence was thin. Shifts from agriculture to higher-paid industry widen gaps; education and social policy later narrow them. Grossman and Krueger (1995) found an environmental Kuznets curve for some local pollutants, though not for many, such as greenhouse gases. Piketty (2014) argued mid-century declines reflected wars and policy, and inequality rose again after 1980.
Frequently asked questions
- Why an inverted U?
- Inequality rises early in development and falls later.
- What is the environmental version?
- A similar pattern for pollution and income.
References
- Kuznets, S. (1955). Economic growth and income inequality. American Economic Review, 45(1), 1–28.
- Grossman, G. M., & Krueger, A. B. (1995). Economic growth and the environment. Quarterly Journal of Economics, 110(2), 353–377.
- Piketty, T. (2014). Capital in the twenty-first century. Harvard University Press.