Kuznets Inverted U Hypothesis of Income Inequality: Looking Inside the Available Economic Literature

Abstract

A dynamic shift in thinking has taken place both locally as well as globally to understand the phenomenon of rising economic inequalities and accordingly find measures to correct this state of disequilibrium. However in no way the contribution of predecessors cannot be put in vain, as their work became the base to build the ongoing recent debate on the subject of economic and income inequalities. One such contribution the literature of economics received was from the seminal work of Simon Kuznets. It was the beginning to discuss the relationship between income distribution and development which later on became popular as Kuznets inverted U hypothesis or Kuznets curve. Though with respect to findings and analysis there is no common consensus to support or reject the Inverted U Hypothesis, but in its own sphere it became the base for carrying forward the research on an important aspect of the economy. In this paper we have tried mainly to show how from different perspectives the literature flowed over the period of time, to see the reliability and the efficacy of this Hypothesis. We divided the whole literature into four categories and accordingly included some important studies within each.