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Heterogeneous Structural Transformation and Growth Incidence across the Income Distribution: the Kuznets Curve Revisited

Saumik Paul

No 2016-1, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: In 1955, in an influential study Kuznets (1955) predicted an inverted-U relationship between development and inequality, mainly through structural transformation. Since then a large body of research has empirically tested the Kuznets hypothesis, but consensus is far less evident. In this paper, I argue that a heterogeneous process of structural transformation across the income distribution may explain such empirical irregularities. I specifically link the heterogeneity in growth incidence resulting from a shrinking agriculture sector across income quantiles to inequality measures. Empirical evidence drawn from the Cote d’Ivoire household survey data supports this theoretical prediction. However, the decomposition results indicate a relatively small contribution of structural transformation to total changes in inequality.

Keywords: Structural Change; Inequality (search for similar items in EconPapers)
JEL-codes: J3 J5 (search for similar items in EconPapers)
Pages: 23 p.
Date: 2016-04
New Economics Papers: this item is included in nep-agr, nep-gro and nep-lma
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