Simon Kuznets hypothesized that at low levels of per capita income, increases in income would lead to increases in income inequality because
A) in less developed countries, the rich are able to save and invest and therefore enrich themselves, while the poor remain at essentially the same economic level.
B) structural changes that often accompany early growth, such as rural-urban migration, occupational changes, and environmental degradation, disproportionately hurt poorer people.
C) growth enhancing policies tend to favor middle-income and high-income households rather than poor households.
D) development processes tend to be concentrated in the manufacturing sector and not in work in the agricultural sector which employs mostly low-income people.

Question

Quizplus · Accepted Answer

Kuznets argued that in the early stages of development, the structural changes that often accompany growth, such as rural-urban migration, occupational changes, and environmental degradation, disproportionately hurt poorer people, leading to increases in income inequality. As per capita income increases, Kuznets hypothesized that inequality would eventually decrease due to various factors, such as human capital development and greater redistribution of income through taxation and social policies.

Simon Kuznets Hypothesized That at Low Levels of Per Capita