What is Kuznets curve in Economics?

  • A curve used to demonstrate the hypothesis that economic growth initially leads to greater inequality, followed later by the reduction of inequality.
  • The idea was first proposed by American economist Simon Kuznets.
  • As economic growth comes from the creation of better products, it usually boosts the income of workers and investors who participate in the first wave of innovation.
  • The industrialisation of an agrarian economy is a common example.
  • This inequality, however, tends to be temporary as workers and investors who were initially left behind soon catch up by helping offer either the same or better products.
  • This improves their incomes.


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