Inequality and development: is the Kuznets curve in effect today?

Abstract

The aim of this work is to study the Kuznets curve in order to examine whether the hypothesis on inequality and development that he posited in his 1955 article is verified or not when using the data at our disposal today; these data are more numerous, both for countries and periods available, than when Kuznets originally conducted his study. The approach that makes this research unique is that it will be performed by differentiating the sample in terms of underdeveloped and developed countries. In this regard, at present (with the data and methodologies of Cochrane-Orcutt and GMM System), the Kuznets hypothesis seems to be robustly verified because, when taking a variable other than the Log GDPpc (GDP per capita in logarithms) as a measure of development, such as the HDI or the proportional contribution of the agricultural sector on GDP, the relationship described by Kuznets still seems to be present; this is not a regularity when using the basic GDPpc variable. Moreover, it has been observed that, over the very long term, the Milanovic hypothesis seems to appear; namely, that inequality follows a sinusoid form rather than a concave curve. Finally, a section has been included in which we see how the 3 effects (scale, technique and composition) of world trade on inequality affect, as has been applied in recent years on CO2 emissions in the Environmental Kuznets Curve (EKC).