- Person
- Simon Kuznets
- Lived
- 1901–1985
- Field
- Economics
- From
- Russian-born American
The story
By the 1950s Simon Kuznets had spent a quarter of a century assembling the most detailed income statistics yet produced, first for the United States and then for other countries. That gave him a rare vantage point on a basic question: as a country grows richer, does the gap between rich and poor widen or narrow? He was one of the first economists to study it systematically with data rather than speculation.
Kuznets set out his answer in "Economic Growth and Income Inequality", published in the American Economic Review in March 1955, and developed it in a long study of the distribution of income by size published in 1963 as part of his series on the quantitative aspects of the economic growth of nations. Comparing developed and less developed countries, he found that growth tended to widen income gaps in poor countries and to narrow them in richer ones. He proposed that inequality first rises in the early stages of development and then falls.
His explanation rested on the structure of the economy. Growth required a shift of workers from agriculture, where incomes varied little, into industry and the cities, where they varied a great deal. Later, as economies matured, mass education opened opportunities to more people, and lower-income groups gained the political power to change government policy.
This inverted U-shaped relationship became known as the Kuznets curve. It sparked whole research programmes on inequality and development, and economists have tested it against new data ever since. Many later studies, including Thomas Piketty's work on the twentieth century, have challenged whether the pattern holds everywhere, and the hypothesis remains debated. The same shape was later borrowed for the "environmental Kuznets curve", which asks whether pollution first rises and then falls as incomes grow.
Kuznets himself treated his finding as a hypothesis to be tested, not a law. Its lasting value is the question it forced onto the agenda: economists and governments now routinely ask not only how fast an economy is growing but how the gains are shared.
Why it matters
The Kuznets curve put the question of who benefits from growth at the centre of economics, and it still frames research on inequality and development.
About Simon Kuznets
Pinsk-born economist who built the first official estimates of US national income, laying the foundations of GDP, and won the 1971 Nobel Prize for his empirical study of economic growth.
More about Simon Kuznets
- Simon Kuznets discovered the 15–25 year economic swingsStudying US data back to 1865, Simon Kuznets identified economic cycles lasting 15 to 25 years, now known as Kuznets cycles or long swings.
- Simon Kuznets produced the first US national income figuresIn 1934 Simon Kuznets delivered the first official estimate of US national income, laying the groundwork for the measure we now call GDP.
- Simon Kuznets launched the study of how nations growSimon Kuznets compiled 60 years of data for 14 countries to explain modern economic growth, helping to found the field of development economics.
- Simon Kuznets showed savings rates stay stable over timeIn 1942 Simon Kuznets used long-run data to show that the US savings rate stayed roughly constant from the 1870s to the 1940s, overturning a prediction drawn from Keynes.
- Simon Kuznets warned that GDP does not measure welfareSimon Kuznets helped standardise the measurement of national output, but cautioned that a nation's welfare can scarcely be inferred from a measure of national income.
- Simon Kuznets helped nations build economic statisticsAfter World War II, Simon Kuznets advised the governments of China, Japan, India, Korea, Taiwan and Israel on setting up their national systems of economic information.
Sources
- Simon Kuznets Wikipedia
- Simon Kuznets Jewish Virtual Library
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.