d) Impact of economic change and development on inequality

Cards (9)

  • Who developed the hypothesis about income inequality in the 1950s?
    Simon Kuznets
  • What does the Kuznets Curve explain?
    How income inequality changes during industrialisation
  • What happens to income inequality during industrialisation?
    It increases as workers shift sectors
  • Why does income inequality increase during industrialisation?
    Workers move to higher productivity manufacturing
  • What occurs to workers left behind in the agricultural sector during industrialisation?
    They experience greater income inequality
  • When does income inequality start to decrease according to Kuznets' hypothesis?
    At some point after industrialisation
  • What is a likely reason for the decrease in income inequality?
    Government intervention funded by tax revenue
  • How is the government intervention funded that helps decrease inequality?
    By increased state tax revenue from production
  • 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