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Refitting the Kuznets curve


  • Desbordes, Rodolphe
  • Verardi, Vincenzo


Using Baltagi and Li (2002)’s semi-parametric fixed effects regression estimator, we investigate the existence of an aggregate ‘Kuznets curve’ in a sample of 113 countries over the 1960–2000 period. Our results show that misspecification of the functional form in a panel model with fixed effects, and the failure to control for the endogeneity of income per capita, can lead to dramatically different conclusions regarding the impact of economic development on inequality. While we find observational evidence of an inverted U relationship between inequality and economic development, this relationship does not seem to be causal. Once we account for endogeneity, inequality appears to decrease monotonically with income per capita.

Suggested Citation

  • Desbordes, Rodolphe & Verardi, Vincenzo, 2012. "Refitting the Kuznets curve," Economics Letters, Elsevier, vol. 116(2), pages 258-261.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:258-261 DOI: 10.1016/j.econlet.2012.03.010

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    References listed on IDEAS

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    Cited by:

    1. Zhu, Hui-Ming & You, Wan-Hai & Zeng, Zhao-fa, 2012. "Urbanization and CO2 emissions: A semi-parametric panel data analysis," Economics Letters, Elsevier, vol. 117(3), pages 848-850.
    2. Herzer, Dierk & Nunnenkamp, Peter, 2015. "Income inequality and health: Evidence from developed and developing countries," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-56.
    3. Maria Rosaria Alfano & Anna Laura Baraldi & Erasmo Papagni, 2015. "The Effect of the Proportionality Degree of Electoral Systems on Corruption," EERI Research Paper Series EERI RP 2015/03, Economics and Econometrics Research Institute (EERI), Brussels.
    4. Wang, Yuan & Zhang, Xiang & Kubota, Jumpei & Zhu, Xiaodong & Lu, Genfa, 2015. "A semi-parametric panel data analysis on the urbanization-carbon emissions nexus for OECD countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 704-709.
    5. Alfano, Maria Rosaria & Baraldi, Anna Laura & Papagni, Erasmo, 2014. "Electoral Systems and Corruption: the Effect of the Proportionality Degree," MPRA Paper 53138, University Library of Munich, Germany, revised 11 Nov 2013.
    6. Nicole Grunewald & Inmaculada Martínez-Zarzoso, 2014. "Green Growth in Mexico, Brazil and Chile: Policy strategies and future prospects," Ibero America Institute for Econ. Research (IAI) Discussion Papers 229, Ibero-America Institute for Economic Research.
    7. Wang, Yuan & Zhang, Chen & Lu, Aitong & Li, Li & He, Yanmin & ToJo, Junji & Zhu, Xiaodong, 2017. "A disaggregated analysis of the environmental Kuznets curve for industrial CO2 emissions in China," Applied Energy, Elsevier, vol. 190(C), pages 172-180.
    8. Tuominen Elina, 2016. "Reversal of the Kuznets curve: Study on the inequality–development relation using top income shares data," Working Papers 1610, University of Tampere, School of Management, Economics.
    9. Wang, Yuan & Han, Rong & Kubota, Jumpei, 2016. "Is there an Environmental Kuznets Curve for SO2 emissions? A semi-parametric panel data analysis for China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1182-1188.
    10. Elina Tuominen, 2015. "Reversal of the Kuznets Curve: Study on the Inequalitys Development Relation Using Top Income Shares Data," WIDER Working Paper Series 036, World Institute for Development Economic Research (UNU-WIDER).
    11. Özlem Yorulmaz, 2016. "Can healthcare ever be less than a necessity in MENA countries? A semiparametric estimation of the relationship between healthcare expenditure and GDP," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(3), pages 1233-1244, May.
    12. Marina Malkina, 2014. "Study of the relationship between the development level and degree of income inequality in the Russian regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 238-248.
    13. repec:kap:enreec:v:69:y:2018:i:1:d:10.1007_s10640-016-0071-x is not listed on IDEAS
    14. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
    15. Rajapaksa, Darshana & Islam, Moinul & Managi, Shunsuke, 2017. "Natural capital depletion: The impact of natural disasters on inclusive growth," MPRA Paper 79277, University Library of Munich, Germany, revised May 2017.

    More about this item


    Income distribution; Inequality; Kuznets curve; Nonparametric analysis; Panel estimator;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration


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