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Kuznets (Inequality) Curve

The Kuznets curve, named after economist Simon Kuznets, is a theory that suggests that economic inequality tends to increase during the early stages of economic development, but then decreases as a country becomes more developed.

The curve is based on the idea that, as countries industrialize and urbanize, there is a shift from agriculture to manufacturing, which leads to higher wages and an increase in the income of urban workers. This creates a widening gap between the rich and the poor. However, as a country becomes more developed, the service sector tends to grow, which creates more opportunities for lower-skilled workers and tends to reduce inequality.

The Kuznets curve is often represented as an inverted U-shape on a graph, with inequality increasing as a country moves up the left-hand side of the curve, and decreasing as it moves down the right-hand side.

It should be noted that the Kuznets curve is a theoretical model, and the relationship between economic development and inequality is complex and may not hold true in all cases.

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