Kuznets curve is the graphical representation of Simon Kuznets's theory ('Kuznets hypothesis') that economic inequality increases over time, then at a critical point begins to decrease. Image File history File linksMetadata Kuznets. ... Simon Smith Kuznets (April 30, 1901 – July 8, 1985) was an economist at Wharton School of the University of Pennsylvania who won the 1971 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for his empirically founded interpretation of economic growth which has led to new and... Differences in national income equality around the world as measured by the national Gini coefficient. ...

One theory as to why this happens, in early stages of development, when investment in physical capital is the main mechanism of economic growth, inequality encourages growth by allocating resources towards those who save and invest the most. Whereas in mature economies human capital accrual, or an estimate of cost that has been incurred but not yet paid, takes the place of physical capital accrual as the main source of growth, and inequality slows growth by lowering education standards because poor people lack finance for their education in imperfect credit markets. Kuznets curve diagrams show an inverted U curve, although variables along the axes are often mixed and matched, with inequality or the Gini coefficent on the Y axis and economic development, time or per capita incomes on the X axis. Economic development is the development of the economic wealth of countries or regions for the well-being of their inhabitants. ... به خاطر اعمال تخریبی یک کاربر مشخص AOLØŒ ویکی‌پدیا معمولاً proxyهای AOL را می‌بندد. متأسفانه ممکن است تعداد زیادی از کاربران AOL از یک خادم proxy واحد استفاده کنند، Ùˆ در نتیجه کاربران بی‌تقصیر AOL معمولاً ندانسته بسته می‌شوند. از دردسر ایجاد شده عذر می‌خواهیم. اگر این اتفاق برای شما افتاد، لطفاً به یکی از مدیران از یک نشانی پست الکترونیک AOL پیغام بفرستید. حتماً نشانی IPÛŒ را در فوق داده شده ذکر کنید. بازگشت به صفحهٔ اصلی. گرفته شده از «http://fa. ... Human capital is a way of defining and categorizing peoples skills and abilities as used in employment and as they otherwise contribute to the economy. ... The Gini coefficient is a measure of inequality developed by the Italian statistician Corrado Gini and published in his 1912 paper Variabilità e mutabilità. It is usually used to measure income inequality, but can be used to measure any form of uneven distribution. ... The per capita income for a group of people may be defined as their total personal income, divided by the total population. ...

KUZNETS RATIO is a measurement of the proportion of income going to the highest earnings (20%), dividing it by the poorest proportion of the society. A value of 1 would mean perfect equality and absolute inequality.

Kuznets had two similar explanations for this historical phenomenon:

• workers migrated from agriculture to industry,
• rural workers moved to urban jobs.

In both explanations, inequality will decrease after 50% of the work force switches over to the higher paying sector. Economic historians have since used skill gap theories and the theories of capital concentration in early economies from classical economists and Marxists to further explain the Kuznets curve. Classical economics is widely regarded as the first modern school of economic thought. ... Marxian economics refers to a body of economic thought stemming from the work of Karl Marx. ...

Interpretation of Kuznets Curve

Kuznets Curve can be interpreted as follows. Transition from agrarian sector to urban industrialization, in which we see a growth in income inequality as income in agriculture is relatively low compare to income earned in city. With this opening up of inequality, we also see that the level of income people earn in rural areas is similar to one another, whereas we see wide range of income level in industrialized city, which further opens up inequality. What then generates decline in Kuznets Curve? First, a rise of mass education movement may opened up opportunity for all and reduce gap in income inequality. Second, social policy put forth by the government as a country becomes rich may explain decline in inequality as government provide transfers, welfare, retirement pension, health care, as an effort to redistribute income throughout different level of income earning groups.

In case of the United States, we can model income inequality through Kuznets Curve with underlying mechanisms such as education and government redistribution which seem to generate up and down concave shaped curve. We can see from the sources presented by Alice Hansen Jones (1775); Edward Wolff (1915-1995) the share of wealth held by top 1% from 1775 to 1995. Around 1775, the top 1% owned about 15% of the wealth, then 30% by 1855 according to U.S Census. The data presented shows inequality to peak around 1935, with the top 1% owning 45% of the share of wealth in the United States and then begin a decline toward civil-war era levels from the World War II years to the 1970s. This period of decline occured during Kuznets' lifetime and appear to be consistent with his theory regarding inequality. However, there has since been a steady increase in the share of wealth held by the top 1%. By the 1990s, inequality had climbed back to late-1930s levels. One possible explanation for this divergence from the Kuznets' curve is the impact of American social mobility on wealth distribution. Kuznets believed that as a country grew richer, its government would make a greater effort towards social spending. But in the U.S., high social mobility fostered a belief in the rewards of "hard work," which, in turn, may have resulted in more employer-provided social programs (welfare capitalism) and less of a welfare state.

Criticism of Kuznets Curve

Kuznets' conclusion that inequality must increase before decreasing, however, rests on shaky ground, because he used cross-sectional data of many countries during the same time period, rather than time series data that showed the progression of individual countries' development. The U-shape in the curve comes not from progression in the development of individual countries, but rather from historical differences between countries. In his data set, many of the middle income countries were in Latin America, a region with historically high levels of inequality. When controlling for this variable, the U-shape of the curve tends to disappear. and give them a massive erection..woah who checks this site In statistics a cross-sectional data set has observations across individuals, firms or countries/regions. ... In statistics and signal processing, a time series is a sequence of data points, measured typically at successive times, spaced apart at uniform time intervals. ... Latin America consists of the countries of South America and some of North America (including Central America and some the islands of the Caribbean) whose inhabitants mostly speak Romance languages, although Native American languages are also spoken. ...

Environmental Kuznets Curve

Another situation where Kuznets type curves appear is the environment. It is claimed that many environmental health indicators, such as water and air pollution, show the inverted U-shape: in the beginning of economic development, little weight is given to environmental concerns, raising pollution along with industrialization. After a threshold, when basic physical needs are met, interest in a clean environment rises, reversing the trend. Now society has the funds, as well as willingness to spend to reduce pollution. This relation holds most clearly true for a few pollutants, such as Sulfur Dioxide and Nitrogen Oxide, but there is little evidence that the relationship holds true for other pollutants, especially those with non-local effects, or for the environment in general. Water pollution Water pollution is a large set of adverse effects upon water bodies (lakes, rivers, oceans, groundwater) caused by human activities. ... Before flue gas desulfurization was installed, the emissions from this power plant in New Mexico contained excessive amounts of sulfur dioxide. ... Sulfur dioxide (or Sulphur dioxide) has the chemical formula SO2. ... The term nitrogen oxide is a general term and can be used to refer to any of these oxides (oxygen compounds) of nitrogen, or to a mixture of them: Nitric oxide (NO), nitrogen(II) oxide Nitrogen dioxide (NO2) Dinitrogen monoxide (N2O) (Nitrous oxide) Dinitrogen trioxide (N2O3) Dinitrogen tetroxide (N2O4) Dinitrogen...

For example, energy, land and resource use (sometimes called the "ecological footprint") do not fall with rising income. While the ratio of energy per real GDP has fallen, total energy use is still rising in most developed countries. In addition, the status of many key "ecosystem services" provided by ecosystems, such as freshwater provision and regulation, soil fertility, and fisheries, have continued to decline in developed countries. In general, Kuznets curves have been found for some environmental health concerns (such as air pollution) but not for others (such as landfills and biodiversity). However, it is important to note that this does not necessarily invalidate the theory - the scale of the Kuznets curves may differ for different environmental impacts. We may still be on the 'upward' leg of energy use Kuznets curve and have to get even richer still before we see a decline. Against this must be considered that much of the environmental damage associated with economic growth, such as extinct species and loss of wilderness, is irreversible. In economics, the gross domestic product (GDP) is a measure of the amount of the economic production of a particular territory in financial capital terms during a specific time period. ...

References

• Arrow, K., Bolin, B., Costanza, R., Dasgupta, P., Folke, C., Holling, C. S., et al. (1995). Economic growth, carrying capacity, and the environment. Ecological Economics, 15(2), 91-95.

• Grossman, G.M. and Krueger, A.B.. (1993). Environmental Impacts of a North American Free Trade Agreement. In "The Mexico-U.S. free trade agreement", P. Garber, ed. Cambridge, Mass.: MIT Press.

• Harbaugh, Bill, Arik Levinson and Dave Wilson (2002) "Reexamining the Empirical Evidence for an Environmental Kuznets Curve," Review of Economics and Statistics, 84(3) August 2002.

• Millennium Ecosystem Assessment (2005) "Ecosystems and Human Wellbeing: Synthesis" Island Press, Washington, DC. Online at http://www.maweb.org//en/Products.Synthesis.aspx

• Van Zanden, J.L. (1995). Tracing the Beginning of the Kuznets Curve: Western Europe during the Early Modern Period. The Economic History Review 48 (4), 643-664.

• Dasgupta, S., Laplante, B., Wang, H. and Wheeler, D. (2002). Confronting the Environmental Kuznets Curve. The Journal of Economic Perspectives, Vol. 16, No. 1., pp. 147-168.