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

Affiliation(s)

Department of Neurology, West Virginia University, Morgantown, USA.

Department of Finance, Banking and Insurance, Appalachian State University, Boone, USA.

Department of Statistics, West Virginia University, Morgantown, USA.

159th Aviation Brigade, United States Army, Fort Campbell, USA.

Department of Neurology, West Virginia University, Morgantown, USA.

Department of Finance, Banking and Insurance, Appalachian State University, Boone, USA.

Department of Statistics, West Virginia University, Morgantown, USA.

159th Aviation Brigade, United States Army, Fort Campbell, USA.

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.

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.

Cite this paper

J. Riggs, J. Hobbs, G. Hobbs and T. Riggs, "Kuznets Curves Stratified by Mean per Capita Income, 1969-2007: Implications Regarding Global Economic Development and Income Inequality*,"*Modern Economy*, Vol. 3 No. 5, 2012, pp. 617-625. doi: 10.4236/me.2012.35081.

J. Riggs, J. Hobbs, G. Hobbs and T. Riggs, "Kuznets Curves Stratified by Mean per Capita Income, 1969-2007: Implications Regarding Global Economic Development and Income Inequality*,"

References

[1] S. Kuznets, “Economic Growth and Income Inequality,” Amer-ican Economic Review, Vol. 45, No. 1, 1955, pp. 1- 28.

[2] S. Robinson, “A Note on the U Hypothesis Relating In- come Inequality and Economic Development,” American Economic Review, Vol. 66, No. 3, 1976, pp. 437-440.

[3] M. Braulke, “A Note on Kuznets’ U,” Review of Eco- nomics and Statistics, Vol. 65, No. 1, 1983, pp. 135-139. doi:10.2307/1924418

[4] R. Ram, “Kuznets’s Inverted-U Hypothesis: Evidence from a Highly Developed Country,” Southern Economic Journal, Vol. 57, No. 4, 1991, pp. 1112-1123. doi:10.2307/1060338

[5] O. Galor and D. Tsiddon, “Income Distribution and Growth: The Kuznets Hypothesis Revisited,” Economica, Vol. 63, No. 250, 1996, pp. S103-S117. doi:10.2307/2554811

[6] T. P. Moran, “Kuznets’s Inverted U-Curve Hypothesis: the Rise, Demise, and Continued Relev-ance of a Socio- economic Law,” Sociological Forum, Vol. 20, No. 2, 2005, pp. 209-244. doi:10.1007/s11206-005-4098-y

[7] G. Firebaugh, “The Trend in Between-Nation Income In- equality,” Annual Review of Sociology, Vol. 26, No. 1, 2000, pp. 323-339. doi:10.1146/annurev.soc.26.1.323

[8] B. Milanovic, “The Haves and the Have-Nots, a Brief and Idiosyncratic History of Global Inequality,” Basic Books, New York, 2011.

[9] J. E. Riggs, J. C. Hobbs, G. R. Hobbs and T. H. Riggs, “The Global Kuznets Curve, 1969-2007,” Modern Econ- omy, Vol. 3, No. 2, 2012, pp. 160-163. doi:10.4236/me.2012.32022

[10] G. Firebaugh, “The New Geography of Global Income Inequality,” Harvard University Press, Cambridge, 2003.

[11] D. Acemolu and J. A. Robinson, “Why Nations Fail, the Origins of Power, Prosperity, and Po-verty,” Crown Busi- ness, New York, 2012.

[12] D. Acemoglu and J. A. Robinson, “The Political Econ- omy of the Kuznets Curve,” Review of Development Eco- nomics, Vol. 6, No. 2, 2002, pp. 183-203. doi:10.1111/1467-9361.00149

[1] S. Kuznets, “Economic Growth and Income Inequality,” Amer-ican Economic Review, Vol. 45, No. 1, 1955, pp. 1- 28.

[2] S. Robinson, “A Note on the U Hypothesis Relating In- come Inequality and Economic Development,” American Economic Review, Vol. 66, No. 3, 1976, pp. 437-440.

[3] M. Braulke, “A Note on Kuznets’ U,” Review of Eco- nomics and Statistics, Vol. 65, No. 1, 1983, pp. 135-139. doi:10.2307/1924418

[4] R. Ram, “Kuznets’s Inverted-U Hypothesis: Evidence from a Highly Developed Country,” Southern Economic Journal, Vol. 57, No. 4, 1991, pp. 1112-1123. doi:10.2307/1060338

[5] O. Galor and D. Tsiddon, “Income Distribution and Growth: The Kuznets Hypothesis Revisited,” Economica, Vol. 63, No. 250, 1996, pp. S103-S117. doi:10.2307/2554811

[6] T. P. Moran, “Kuznets’s Inverted U-Curve Hypothesis: the Rise, Demise, and Continued Relev-ance of a Socio- economic Law,” Sociological Forum, Vol. 20, No. 2, 2005, pp. 209-244. doi:10.1007/s11206-005-4098-y

[7] G. Firebaugh, “The Trend in Between-Nation Income In- equality,” Annual Review of Sociology, Vol. 26, No. 1, 2000, pp. 323-339. doi:10.1146/annurev.soc.26.1.323

[8] B. Milanovic, “The Haves and the Have-Nots, a Brief and Idiosyncratic History of Global Inequality,” Basic Books, New York, 2011.

[9] J. E. Riggs, J. C. Hobbs, G. R. Hobbs and T. H. Riggs, “The Global Kuznets Curve, 1969-2007,” Modern Econ- omy, Vol. 3, No. 2, 2012, pp. 160-163. doi:10.4236/me.2012.32022

[10] G. Firebaugh, “The New Geography of Global Income Inequality,” Harvard University Press, Cambridge, 2003.

[11] D. Acemolu and J. A. Robinson, “Why Nations Fail, the Origins of Power, Prosperity, and Po-verty,” Crown Busi- ness, New York, 2012.

[12] D. Acemoglu and J. A. Robinson, “The Political Econ- omy of the Kuznets Curve,” Review of Development Eco- nomics, Vol. 6, No. 2, 2002, pp. 183-203. doi:10.1111/1467-9361.00149