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Kuznets Curves Stratified by Mean per Capita Income, 1969-2007: Implications Regarding Global Economic Development and Income Inequality*

DOI: 10.4236/me.2012.35081, PP. 617-625

Keywords: Economic Development, Global Economy, Income Inequality, Kuznets Curve

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Abstract:

A Kuznets curve, based upon GDP and population estimates for the years 1969 through 2007 from 36 nations and regions comprising the entire global economy and population, has been previously demonstrated. This global Kuznets curve of income inequality was a mathematical consequence of the definition of income inequality used (the coefficient of variation, which is the standard deviation divided by the mean) and two observations; the standard deviation of population-weighted national/regional mean per capita income increased linearly, and the mean global per capita income increased exponentially over the period investigated. In this analysis, these same 36 nations/regions were stratified into three groups based upon their 1969 mean per capita income to determine if those observations were also applicable to this subgroup analysis. This study demonstrated that between 1969 and 2007, population-weighed income inequality actually increased in the two richest groups and decreased in the poorest group. This observation was primarily produced by the finding that the exponential rate of growth of the population-weighted mean per capita income in the poorest group was nearly twice that of the two richest groups. This finding suggests that Kuznets hypothesis that increasing income inequality was an early feature of economic development and that decreasing income inequality was a late feature of economic development is not applicable to a global economy stratified on the basis of mean per capita income.

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