Th4.2: Impact of Economic Change and Development

Question 1

What does the Kuznets hypothesis state?

Answer 1

that as a society develops and moves from agriculture to industry, inequality increases as the wages of industrial workers rises faster than farmers

Question 2

Then, how does inequality fall?

Answer 2

wealth is redistributed through taxation and government spending

Question 3

Who discredited this theory?

Answer 3

Piketty

Question 4

What did they argue instead?

Answer 4

that inequality rises as the country develops as the rate of return on capital grows, so the rich get richer and inequality increases