Is There a Kuznets Curve?

No. There has never been good evidence for a pattern of rising inequality in low-income countries and falling inequality in higher income countries. The only evidence that appears to support the Kuznets hypothesis is the cross-sectional pattern of inequality levels across countries, although the Kuznets hypothesis is an assertion about the path of inequality within countries. Numerous cross-sectional studies established the Kuznets curve as a stylized fact, dominating empirical and theoretical research on the effect of economic growth on income inequality since then. New international panel data with the first internally consistent time series for a large number of countries shows no evidence of a Kuznets curve. The data show an antiKuznets curve: inequality decline in low-income countries, and inequality increase in highincome countries. The U-shaped pattern shows up strongly in a non-parametric trend, in stochastic kernel estimation, but weakly in a quadratic fixed effect trend. JEL Codes: D31, O15, O47