Economic Growth and Income Inequality

Most debate on the internal gap between rich and poor people in developing nations begins with this seminal presidential address delivered by Simon Kuznets to the American Economic Association in 1954. The address, portions of which are reprinted here, uses limited data from Germany; the United Kingdom, and the United States to draw the conclusion that since the 1920s, and perhaps even earlier; there has been a trend toward equalization in the distribution of income. Kuznets discusses in some detail the possible causes for this trend, examining those factors in the process of industrialization that tend to counteract the trend toward the increasing concentration of savings in the hands of the wealthy. That…