A proper farewell to Kuznets' hypothesi

Abstract

The aim of this paper is to o¤er a more appropriate test of Kuznets inverted-Uhypothesis than the one routinely used in the literature and implement it using panel and country-by-country regressions. We explore whether countries experiencing large shifts in population from the agri- cultural/rural sector to the urban one are characterized by an evolution of income inequality along the lines discussed by Simon Kuznets in its classical article. Our results show that there is no systematic relationship between income inequality and agricultural employment or rural population.