When talking about inequality of income distributions within the society, it is inevitable to talk about how it relates to the process of economic development. About more than half a century ago, Simon Kuznets made his hypothesis on the relationship of the two and it was presented as an inverted U-shape curve—the Kuznets Curve. The pattern of the inverted U-shape intuitively indicates the timing characteristic that the inequality increases in the initial stages of development then decreases at the higher level of development. Later on the stylised fact has been formalised by numerous of studies that proving its validity and implicating in modern societies. Certainly there would be some skeptical opinions as the conjecture was based on scanty data, but the reasoning model Kuznuts built is considering an empirical regularity.
This paper forwards will examine the reasons of the pattern of the Kuznets curve by conducting Kuzenets’ (1955) explanation: in the period of economy rapidly growing, there would be a sharp difference arising between the poor and the rich which gives the incentive to the industrial productivity and eventually drive the economy to a higher level. When an economy is settled on a relative high level of development, it is clearly that most portion of population live with a relative high standard of life, or more precisely with higher incomes, briefly, the inequality should be decreasing at this stage. The next will present the empirical evidence that contribute to the formalisation of Kuznuts’ conjecture. And as well as some other factors that facilitate the relationship such as the policy structure. Afterwards, it will discuss the validity of the conjecture in more recent cases such as of which the paths of ine...
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Income inequality in the United States has increased and decreased throughout history, but in the recent years, the widening gap has become a serious issue. Income inequality is usually measured by Gini coefficient. According to this method coefficient varies between 0 and 100; while 0 represents complete equality (income is distributed equally among all the population of the country), 100 represents complete inequality (only one person receives all the country’s income, while the rest of the population receives nothing). According to the Census of Bureau, the official Gini coefficient in the U.S. was 46.9 in 2010. This is way higher than the all-time low coefficient of 38.6 set in 1968 (qtd. in Babones).
Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see
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Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality exists due to people not taking advantage of equal economic opportunities, the diversity of people qualified for certain occupations, and the ideas centered around capitalism.... ... middle of paper ...
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