- 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.