Growth and Inequality

This chapter focuses on growth and inequality, and more specifically, the Kuznets Curve, in order to show the relationship between income per capita and inequality. Kuznets suggested that the relationship has an inverted U-shape. In the final stages of a country’s development, he argued, inequality would increase; after a certain point, however, inequality would decrease. This curve, and the points in question, are different for each country. The rise of inequality has had political consequence in some rich countries like the United States. Reduced inequality may stimulate growth because of reduced social conflict. Education is one way to reduce inequality.

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