Economic Growth and Income Inequality

By S. Kuznets. The Gap between Rich and Poor, 2019

1,788 citations recorded by the source corpus.

In recent years the problem of economic inequalities has become one of the most often discussed problems in economics. Even though from neoclassical perspective inequalities should not have negative impact on economy, still the relation between inequalities and economic growth is not obvious. Traditionally, the starting point in this discussion is Simon Kuznets concept, according to which inequality rises in the early phases of economic development and decreases as the growth takes place. The empirical verification of this concept has been investigated, but the evidence is ambiguous. In this context, re-examining Kuznets theory for socialist countries in Asian (i.e. China, Vietnam and Lao) is especially interesting because of the rapid economic growth yet still keeping authoritarian regime. Therefore the main aim of the study is to verify the relation between economic growth and income inequality in China, Lao and Vietnam in years 1990–2022 and assess whether the relation takes shape of so-called Kuznets curve. In order to achieve the goal the data analysis and basic econometric methods are used. The results generally support relations indicated by Kuznets except for Lao for which obtained result were not statistically significant. The findings keep the door open to further analyses aimed at the identification and exploration of more significant determinants that could conclusively verify the relation between inequalities and economic development. Most promising would be incorporating some institutional determinants as it was proposed in Acemoglu and Robinson works.

Subfields: Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/df6ffffeedcbb74c35d1593e24396294e0f835ba

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In Sociology and Political Science

Citations in the corpus

Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies (2020, background): “Similarly, Robinson (1952) and Kuznets (1955) and then Friedman and Schwartz (1963b) sponsor that financial system development augments economic growth.”
Testing the environmental Kuznets curve hypothesis: an empirical study for East African countries (2019, methodology): “Simon Kuznets studied this relationship and produced the Kuznets economic hypothesis.”
The inequality-emissions nexus in the context of trade and development: A quantile regression approach (2017, background): “1 The original Kuznets Curve hypothesizes going back to Kuznets (1955) postulates an inverted U-shaped relation between per capita income and inequality.”
The key sectors for energy conservation and carbon emissions reduction in China: Evidence from the input-output method (2018, methodology): “…between carbon emission and economic level (Kaika and Zervas, 2013a, 2013b; Al-mulali et al., 2015; Luo et al., 2017), using the environmental Kuznets curve (EKC) (Kuznets, 1955), which holds that there is an inverted U-shaped relationship between economic growth and environmental quality.”
Economic complexity, human capital and income inequality: a cross-country analysis (2019, background): “Economists, however, contend that an aggregate monetary measure of economic size is an inadequate proxy for economic development when it comes to explaining variations in income inequality (Kuznets 1973; Stiglitz et al.”
Environmental Kuznets curve for CO2 emissions: a literature survey (2019, background): “This phenomenon is also referred as Environmental Kuznets Curve (EKC) hypothesis in environmental economics literature, named after Simon Kuznets (1955), who described an inverted U-shaped association between eco omic growth and income inequality.”
Impact of high-speed rail on regional economic disparity in China (2017, background): “The classical literature suggests that the change in regional disparity is an inverted U-curve, known as Kuznet curve (Kuznets, 1955).”
Financial Development, Technological Innovation and Income Inequality: Time Series Evidence from Turkey (2021, positive): “Following Kuznets (1955), Greenwood and Jovanovich (1990) reveal that the financial development-income inequality relation is an inverted-U shaped.”