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4.2 Poverty and inequality
4.2.2 Inequality
d) Impact of economic change and development on inequality
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Cards (9)
Who developed the hypothesis about income inequality in the 1950s?
Simon Kuznets
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What does the Kuznets Curve explain?
How
income inequality
changes during
industrialisation
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What happens to income inequality during industrialisation?
It increases as workers shift
sectors
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Why does income inequality increase during industrialisation?
Workers move to higher
productivity
manufacturing
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What occurs to workers left behind in the agricultural sector during industrialisation?
They experience greater
income inequality
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When does income inequality start to decrease according to Kuznets' hypothesis?
At some point after
industrialisation
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What is a likely reason for the decrease in income inequality?
Government intervention
funded by
tax revenue
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How is the government intervention funded that helps decrease inequality?
By increased
state tax revenue
from production
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country changes sectors from primary (farming) to secondary (manufacturing), productivity increases and the
per capita income
increases
However, inequality increasing as the gap in wages between primary and
secondary sector
significant
economy will reach a
turning point of income
where inequality begins to fall
occurs as the
primary sector
diminishes while the secondary and tertiary (services) sectors increase
Developed economies
generate more income from secondary and
tertiary sectors