A semi-parametric partially linear investigation of the Kuznets' hypothesis

In contrast to conventional parametric quadratic approaches for analyzing the Kuznets' hypothesis, which states that income inequality rises first but then falls over the cycle of economic development, we apply a semi-parametric partially linear regression to investigate the existence of such an inverted-U relationship between inequality and development. We find overwhelming evidence in support of an inverted-U curve and, thus, confirm the validity of the Kuznets' hypothesis for a large sample of countries. Moreover, our results are robust to different control variables and to an alternative inequality measure. Journal of Comparative Economics 34 (3) (2006) 634-647.