Kuznets hypothesis ● Kuznets ○ Industrialization will lead inequality ○ This will decrease ○ Structural transformation ■ Rural to industrial sector ■ Inequality trends ○ Inequality is present in early industrialization stages ■ Decreases as… ● Educated ● Urban ● Democratic ● Historical patterns ○ 10s-70s ■ First rising then declining ○ GDP per capita had grown 4X between 1913-1979 ○ 80s, inequality has increased ■ Gini co-eff has increased 10 points ○ Technological change, Globalization policy change has gone against this trend ● Comparative cases ○ U.K ■ Similar U curve as U.S. ■ Inequality has declined in 1979 ■ Increased after this point again ■ Welfare expansion ● Reduced inequality ○ Spain ■ U-curve present ● Inequality decrease ■ Recent data shows inequality increasing again ■ Similar patterns as other countries ● Italy ○ Similar patterns ■ Decline until 80s ○ “Great Liberalizing Reversal” ■ After 1980 ■ Similar trends as U.S and U.K ● Policy changes,globalization, technological change will influence shape of U-curve ● Seen identical trends in different countries ○ Not automatic ○ Human decisions ○ Institutional context ○ Will be seen on other developing countries once it applies industrial infrastructures. ■ This is a over-generation event ■ Seems to be happening over a lifetime