Inequality and Economic Growth: Kuznets Curve and the Case of South Korea
Keywords:Economic growth, Kuznets hypothesis, inequality of income, South Korea
This paper examines Simon Kuznets’ hypothesis of economic growth, which states that in the early stages of a country’s economic growth, the distribution of income gets worse; only at later stages will it improve. This hypothesis is charted using Kuznets inverted-U shaped curve, which tracks the income distribution of a country over time. Also explored are the Gini coefficient and Lorenz curve, which are the primary ways of measuring and graphing inequality levels. Kuznets gives six characteristics that are said to define economic growth. Kuznets inverted-U curve hypothesis is tested in the case of South Korea’s economic growth and inequality levels since the 1950s. Alternatively, Piketty offers counter arguments to Kuznets’ hypothesis, stating that inequality actually increases as a country becomes more developed. Empirical data such as South Korea’s historical GDP per capita, Gini coefficient, and share of production figures are used to evaluate Kuznets hypothesis. Ultimately, the question to be answered is: Does South Korea follow Kuznets’ hypothesis of economic growth from the 1950s to the present?
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