The Kuznets curve is a theory suggesting that as a country develops economically, income inequality first increases and then decreases, forming an inverted U-shaped pattern. It was proposed by economist Simon Kuznets in 1955.

How it works:

• Early stage: Workers move from low-paying agriculture to higher-paying industrial jobs. This transition initially makes the income gap larger.
• Later stage: As the economy matures, wages increase, human capital improves, and social policies are put in place, which helps reduce the income gap.

Real-world reality:

• The pattern was clearly seen in countries like the UK and USA during the 19th century.
• Many modern developing countries do not follow this path. Factors like globalisation and unequal access to education often keep inequality high.

Main takeaway:

Economic growth alone does not guarantee a drop in inequality. Governments often need active policies, such as better education and fair wealth distribution, to ensure that inequality eventually declines.