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Kuznets Revisited: What Do We Know about the Relationship between Structural Transformation and Inequality?

Author

Listed:
  • Çinar Baymul

    (Honorary Research Fellow, The University of Manchester. Author email: cinar.baymul@manchester.ac.uk)

  • Kunal Sen

    (Director, United Nations University-World Institute for Development Economics Research (UNU-WIDER) and Professor of Development Economics, Global Development Institute, The University of Manchester. Author email: kunal.sen@manchester.ac.uk)

Abstract

This paper revisits the Kuznets postulate that structural transformation will be associated with increasing inequality using comparable time series data for 32 developing and recently developed economies for the post-1950 period. We find that structural transformation in the majority of our economies has resulted in the movement of workers from agriculture to services, and not to manufacturing. Economies show different paths of structural transformation that cut across geographical regions, being either structurally underdeveloped, structurally developing, or structurally developed. We see clear differences in the structural transformation–inequality relationship depending on the stage of structural transformation that a particular economy is in, as well as across regions. We do not see a Kuznets-type relationship between manufacturing employment share and inequality when we take into account the different paths of industrialization that economies in our dataset have followed. On the other hand, inequality unambiguously increases with structural transformation if the movement of workers from agriculture is to services.

Suggested Citation

  • Çinar Baymul & Kunal Sen, 2019. "Kuznets Revisited: What Do We Know about the Relationship between Structural Transformation and Inequality?," Asian Development Review, MIT Press, vol. 36(1), pages 136-167, March.
    • Handle: RePEc:tpr:adbadr:v:36:y:2019:i:1:p:136-167
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    Citations

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    Cited by:

    1. Hanan Morsy & Abebe Shimeles & Tiguene Nabassaga, 2023. "Structural Change and Inequality in Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 228-245.
    2. Wannaphong Durongkaveroj, 2021. "Structural transformation and inequality: Does trade openness matter?," Departmental Working Papers 2021-10, The Australian National University, Arndt-Corden Department of Economics.
    3. Emine Tahsin & Furkan Börü, 2020. "Structural Transformation, Income Inequality, and Employment Linkages in Turkey’s Regions," Journal of Economy Culture and Society, Istanbul University, Faculty of Economics, vol. 62(62), pages 91-121, December.
    4. Emine Tahsin & Furkan Börü, 2020. "Structural Transformation, Income Inequality, and Employment Linkages in Turkey’s Regions," Journal of Economy Culture and Society, Istanbul University, Faculty of Economics, vol. 62(0), pages 91-121, December.
    5. Diego Martínez-Navarro & Ignacio Amate-Fortes & Almudena Guarnido-Rueda, 2020. "Inequality and development: is the Kuznets curve in effect today?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 703-735, October.
    6. Nanak Kakwani & Xiaobing Wang & Jing Xu & Ximing Yue, 2021. "Assessing the Social Welfare Effects of Government Transfer Programs: Some International Comparisons☆," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(4), pages 1005-1028, December.
    7. Kunal Sen, 2019. "Structural Transformation around the World: Patterns and Drivers," Asian Development Review, MIT Press, vol. 36(2), pages 1-31, September.
    8. Nanak Kakwani & Xiaobing Wang & Jing Xu & Ximing Yue, 2020. "Assessing the Social Welfare Effects of Government Transfer Programs: Some International Comparisons," LIS Working papers 786, LIS Cross-National Data Center in Luxembourg.
    9. Anderson, Edward, 2022. "The correlates of declining income inequality among emerging and developing economies during the 2000s," World Development, Elsevier, vol. 152(C).
    10. Durongkaveroj, Wannaphong, 2022. "Structural Transformation, Income Inequality and Government Expenditure: Evidence from International Panel Data," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(3), pages 29-44.
    11. Yanan Li & Chunbing Xing, 2020. "Structural transformation, inequality, and inclusive growth in China," WIDER Working Paper Series wp-2020-33, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    agriculture; inequality; Kuznets; manufacturing; services; structural transformation;
    All these keywords.

    JEL classification:

    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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