Are Indias trends in per capita income and income inequality consistent with the Kuznets hypothesis?
The Kuznets hypothesis implies that as per capita income increases, the Gini coefficient should first increase, then decrease (forming an inverted-U pattern). While it is true that the above picture may represent the second-half of the Kuznets curve, India’s per capita income was low during this period. This graph doesn’t provide much support for Kuznets’s hypothesis. • Consider the following data from 1991 on GDP per capita and income inequality: Source: Deininger and Squire Data Set, available from the World Bank: http://www.worldbank.org/research/growth/dddeisqu.htm Graph these data with GDP per capita on the horizontal axis and the Gini coefficient on the vertical. Is there any indication of a Kuznets curve for these countries? There is no evidence of an inverted-U for these data. • Consider the information in Appendix 6.2, and the information in the table below: • Calculate this country’s GDP growth rate if each income quintile’s growth rate is given equal weighting. G1 = (0.078*0
The Kuznets hypothesis implies that as per capita income increases, the Gini coefficient should first increase, then decrease (forming an inverted-U pattern). While it is true that the above picture may represent the second-half of the Kuznets curve, India’s per capita income was low during this period. This graph doesn’t provide much support for Kuznets’s hypothesis. • Consider the following data from 1991 on GDP per capita and income inequality: Source: Deininger and Squire Data Set, available from the World Bank: http://www.worldbank.org/research/growth/dddeisqu.htm Graph these data with GDP per capita on the horizontal axis and the Gini coefficient on the vertical. Is there any indication of a Kuznets curve for these countries? There is no evidence of an inverted-U for these data. • Consider the information in Appendix 6.2, and the information in the table below: • Calculate this country’s GDP growth rate if each income quintile’s growth rate is given equal weighting. G1 = (0.078*0
