Skip to main content
SpringerLink
Log in

Determinants of Cross-Country Income Inequality: An ‘Augmented’ Kuznets Hypothesis

  • Chapter
Equality, Participation, Transition

Abstract

This paper presents an alternative hypothesis as to why income inequality differs between countries. The only currently existing hypothesis was formulated by Kuznets (1955). Kuznets’ hypothesis is briefly reviewed in Section 4.2. It provides an indispensable background to our ‘augmented’ Kuznets’ hypothesis which is formulated in Section 4.3. The empirical assessment of our hypothesis is presented in Section 4.4. The hypothesis is tested on a cross-sectional sample of 80 countries including all OECD countries, all European (former) socialist countries, and 50 African, Asian, and Latin American countries. The data are from the 1980s. Section 4.5 spells out the main conclusions and implications of our hypothesis.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Ahluwalia, M. S. (1976) ‘Inequality, Poverty and Development’, Journal of Development Economics, no. 3.

    Google Scholar 

  • Alesina, A. and Rodrik, D. (1994) ‘Distributive Politics and Economic Growth’ Quarterly Journal of Economics, 109: 465–90.

    Article  Google Scholar 

  • Anand, S. and Kanbur, R. (1993) ‘Inequality and Development: A Critique’, Journal of Development Economics, 41: 19–43.

    Article  Google Scholar 

  • Atkinson, A. B. (1987) ‘Income Maintenance and Social Insurance’ in A. J. Auerbach and M. Feldstein (eds), Handbook of Public Economics, Amsterdam, New York: North Holland.

    Google Scholar 

  • Atkinson, A. B. and Micklewright, J. (1992) Economic Transformation in Eastern Europe and the Distribution of Income, Cambridge: Cambridge University Press.

    Google Scholar 

  • Atkinson, A. B. et al. (1984) ‘Unemployment Benefit, Duration and Incentives in Britain: How Robust is the Evidence’, Journal of Public Economics, 23: 3–26.

    Article  Google Scholar 

  • Bishop, J. A., Formby, J. P. and Thistle, P. D. (1991) ‘Changes in the US Earnings Distributions in the 1980s’, Applied Economics, 23: 425–34.

    Article  Google Scholar 

  • Blank, R. M. (1993) ‘Public Sector Growth and Labor Market Flexibility: the United States vs. the United Kingdom’, National Bureau of Economic Research Working Paper no. 4339, April.

    Google Scholar 

  • Bulir, A. (1998) ‘Income Inequality: Does Inflation Matter’, IMF Working paper no. 98/7, January 1998.

    Google Scholar 

  • Coulter, F. A. E., Cowell, F. A. and Jenkins, S. P. (1992) ‘Equivalence Scale Relativities and the Extent of Inequality and Poverty’, The Economic Journal, 102: 1067–82.

    Article  Google Scholar 

  • Danziger, S., Haveman, R. and Plotnick, R. (1981) ‘How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review’, Journal of Economic Literature, 19: 975–1028.

    Google Scholar 

  • Deininger, K. and Squire, L. (1996) ‘Measuring Income Inequality: a New Data Base’, The World Bank Economic Review, 10: 565–91.

    Article  Google Scholar 

  • Dumke, R. (1991) ‘Income Inequality and Industrialization in Germany, 1850–1913: the Kuznets Hypothesis Re-examined’, in Y. S. Brenner, H. Kaelble and M. Thomas (eds), Income Distribution in Historical Perspective, Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l’Homme.

    Google Scholar 

  • Dye, T. R. and H. Ziegler (1988) ‘Socialism and Equality in Cross-National Perspective’, PS: Political Science and Politics, Winter: 45–56.

    Google Scholar 

  • Garner, T., Okrasa, W., Smeeding, T. and Torrey, B. Boyle (1993) ‘Household Surveys of Economic Status in Eastern Europe: An Evaluation’, in S. Powers (ed.), Proceedings from the Conference on Economic Statistics for Economies in Transition: Eastern Europe in the 1990’s, Washington, D.C.: US Bureau of Labor Statistics.

    Google Scholar 

  • Hirschman, A. O. (1973) ‘The Changing Tolerance for Income Inequality in the Course of Economic Development: With a Mathematical Appendix’, Quarterly Journal of Economics, 87(4): 544–65.

    Article  Google Scholar 

  • Kaelble, H. and Thomas, M. (1991) ‘Introduction’, in Y. S. Brenner, H. Kaelble and M. Thomas (eds), Income Distribution in Historical Perspective, Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l’Homme.

    Google Scholar 

  • Kupa, M. and Fajth, G. (1990) ‘Hungarian Social Policy and Distribution of Incomes of Households’, mimeo, Budapest.

    Google Scholar 

  • Kuznets, S. (1955) ‘Economic Growth and Income Inequality’, American Economic Review, 45(March): 1–28.

    Google Scholar 

  • Kuznets, S. (1966) Modern Economic Growth: Rate, Structure and Speed, New Haven: Yale University Press.

    Google Scholar 

  • Lecaillion, J., Paukert, F., Morrisson, C. and Germidis, D. (1984) Income Distribution and Economic Development: An Analytical Survey, Geneva: ILO.

    Google Scholar 

  • Le Grand, Julian (1982) The Strategy of Equality: Redistribution and the Social Services, London: Allen and Unwin.

    Google Scholar 

  • Lindert, P. H. (1989) ‘Modern Fiscal Redistribution: A Preliminary Essay’, Agricultural History Center, University of California, Davis, Working Paper Series no. 55, June.

    Google Scholar 

  • Lindert, P. H. (1991) ‘How Welfare Spending Evolves’, Agricultural History Center, University of California, Davis, Working Paper Series no. 66, July.

    Google Scholar 

  • Lindert, P. H. and Williamson, J. G. (1985) ‘Growth, Equality, and History’, Explorations in Economic History, 22: 341–77.

    Article  Google Scholar 

  • Lydall H. F. (1968) The Structure of Earnings, Oxford: Oxford University Press.

    Google Scholar 

  • Matthews, M. (1978) Privilege in the Soviet Union, London: Allen and Unwin.

    Google Scholar 

  • Meron, M. (1991) ‘La dispersion des salaires de l’Etat 1982–1986’, Economie et Statistique, no. 239 (Janvier).

    Google Scholar 

  • Morrison, C. (1984) ‘Income Distribution in East European and Western Countries’, Journal of Comparative Economics, 8(2): 121–38.

    Article  Google Scholar 

  • Oshima, H. T. (1991) ‘Kuznets’ Curve and Asian Income Distribution’, in T. Mozoguchi (ed.), Making Economies More Efficient and More Equitable: Factors Determining Income Distribution, Economic Research Series no. 28, The Institute of Economic Research, Hitotsubashi University, Tokyo: Kinokuniya Company Ltd and Oxford University Press.

    Google Scholar 

  • Paukert, F. (1973) ‘Income Distribution at Different Levels of Development: A Survey of Evidence’, International Labor Review, 108 (2–3): 97–125.

    Google Scholar 

  • Perotti, R. (1991) ‘Income Distribution, Politics and Growth: Theory and Evidence’, mimeo, Columbia University.

    Google Scholar 

  • Perotti, R. (1992) ‘Income Distribution, Politics, and Growth’, American Economic Review Papers and Proceedings, May.

    Google Scholar 

  • Persson, T. and G. Tabellini (1992) ‘Growth, Distribution, and Politics’, Theory and Evidence’, in A. Cukierman, Z. Hercowitz and L. Leiderman (eds), Political Economy, Growth and Business Cycles, Boston, Mass.: MIT Press, pp. 3–22.

    Google Scholar 

  • Phelps-Brown, H. (1977) The Inequality of Pay, Oxford: Oxford University Press.

    Google Scholar 

  • Phelps-Brown, H. (1988), Egalitarianism and the Generation of Inequality, Oxford: Clarendon Press.

    Book  Google Scholar 

  • Polak, B. and J. G. Williamson (1993) ‘Poverty, Policy and Industrialization in the Past’, in M. Lipton and J. van der Gaag (eds), Including the Poor, Proceedings of a symposium organized by the World Bank and International Food Policy Research, World Bank, World Bank Regional and Sectoral Studies, pp. 219–48.

    Google Scholar 

  • Pryor, F. L. (1971) ‘Economic System and the Size Distribution of Income and Wealth’, Indiana University, International Development Research Center.

    Google Scholar 

  • Pryor, F. L. (1973) Property and Industrial Organization in Communist and Capitalist Nations, Bloomington and London: Indiana University Press.

    Google Scholar 

  • Psacharopoulos et al. (1992) Poverty and Income Distribution in Latin America: The Story of the 1980s, Washington, D.C.: World Bank, Latin American and the Caribbean Technical Department, Regional Studies Program, Report no. 27, December.

    Google Scholar 

  • Ram, R. (1991) ‘Kuznets’s Inverted U-Hypothesis: Evidence from a Highly Developed Country’, Southern Economic Journal, 57(April): 1112–23.

    Article  Google Scholar 

  • Ravallion, M. (1995) ‘Growth and Poverty: Evidence for Developing Countries in the 1980s’, Economics Letters, 48: 411–17.

    Article  Google Scholar 

  • Sawyer, M. (1982), ‘Income Distribution and the Welfare State’, in A. Boetho, The European Economy, Oxford: Oxford University Press.

    Google Scholar 

  • Soderberg, J. (1991) ‘Wage Differentials in Sweden, 1725–1950’, in Y. S. Brenner, H. Kaelble and M. Thomas (eds), Income Distribution in Historical Perspective, Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l’Homme.

    Google Scholar 

  • Summers, R. and Heston, A. (1991) ‘The Penn World Table (Mark 5): An Expanded Set of International Comparisons’, Quarterly Journal of Economics, 106 (2).

    Google Scholar 

  • Thomas, M. (1991) ‘The Evolution of Inequality in Australia in the Nineteenth Century’, in Y. S. Brenner, H. Kaelble and M. Thomas (eds), Income Distribution in Historical Perspective, Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l’Homme.

    Google Scholar 

  • Tocqueville, A. de (1997 [1835]) Memoir on Pauperism, Chicago: Ivan R. Dee, Inc. Publishers.

    Google Scholar 

  • Ubieto, A., Regla, J., Jover, J. M. and Seco, C. (1972) Introducción a la Historia de España, Editorial Teide, Barcelona.

    Google Scholar 

  • United Nations Development Program (1992) The Human Development Report, New York: UNDP.

    Google Scholar 

  • Williamson, J. (1991) ‘British Inequality during the Industrial Revolution: Accounting for the Kuznets Curve’, in Y. S. Brenner, H. Kaelble and M. Thomas (eds), Income Distribution in Historical Perspective, Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l’Homme.

    Google Scholar 

  • Williamson, J. (1991a) Inequality, Poverty, and History, Cambridge, Mass.: Basil Blackwell.

    Google Scholar 

  • White, H. (1980) ‘A Heteroskedasticity-Consistent Covariance Matrix and a Direct Test for Heteroskedasticity’, Econometrica, 48: 817–38.

    Article  Google Scholar 

  • World Bank (1989) Poland: Subsidies and Income Distribution, World Bank Report 7776-POL, Washington: World Bank.

    Google Scholar 

  • World Bank (1991) Czechoslovakia: Transition to a Market Economy, A World Bank Country Study, Washington D.C.

    Google Scholar 

Download references

Authors
  1. Branko Milanović
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of Zagreb, Croatia

    Vojmir Franičević (Professor of Economics) (Professor of Economics)

  2. University of Perugia, Italy

    Milica Uvalić (Professor of Economics) (Professor of Economics)

Copyright information

© 2000 Palgrave Macmillan, a division of Macmillan Publishers Limited

About this chapter

Cite this chapter

Milanović, B. (2000). Determinants of Cross-Country Income Inequality: An ‘Augmented’ Kuznets Hypothesis. In: Franičević, V., Uvalić, M. (eds) Equality, Participation, Transition. Palgrave Macmillan, London. https://doi.org/10.1057/9780230523098_4

Download citation

Publish with us

Policies and ethics

Search

Navigation