Technology and Inequality: Empirical Evidence from a Selection of OECD Countries

Kuznets suggested that economic progress, in the early stages of the industrialization, is accompanied by increasing inequality, but that these disparities tend to disappear as the industrialization process deepens and the benefits of development are more widely distributed. This conjecture is inconsistent with observed patterns of inequality in the 1970s and 1980s. This paper examines the dynamics of inequality across OECD countries over the 1970-1990 period, presenting and assessing the dominant explanations in the literature. It is suggested that an augmented Kuznets curve in which the evolution of the relationship between growth and inequality for highly developed countries no longer exhibit the negative relationship between growth and inequality, is consistent with recent empirical observations.