Kuznets and inequalities (A2-w18)

The Kuznets curve is derived from empirical data and it supports the hypothesis that things will get worse before it gets better. Similarly, as the income of an economy rises,  income inequality worsen and beyond a certain level, it will start to fall.

(a) Explain what is meant by ‘things get worse before it gets better’ and consider whether it is relevant to both rich and poor nations. [12]

(b) Despite having high income, nations continue to be plagued with rising income inequalities. 
Discuss the effectiveness of government policy in its attempt to redistribute income in developed economies. [13]