Kuznets Revisited: An Econometric Exploration of Growth and Inequality Across 39 Economies

Abstract

Using World Bank panel data and Kuznets’ theory, this study examines the connection between economic growth and income inequality in 39 nations between 2004 and 2019. Three econometric models are used in the analysis: fixed effects, quadratic regression, and linear regression. The results show a complex and nonlinear relationship. In the overall sample, the linear model reveals a weak but significant positive correlation between gross domestic product and inequality; in lower-middle-income countries, however, the relationship is strongly negative, suggesting that economic growth can mitigate inequality. A U-shaped dynamic, in which inequality initially decreases with growth before increasing once more above a threshold country income level (281.8 billion USD), is confirmed by the quadratic and fixed effects models. This study is significant because it takes a modern, disaggregated approach that improves “Kuznets” theory in the context of globalization and provides valuable policy insights. It highlights the need for development-stage-specific measures—such as progressive taxation, equitable access to education, and rural investment—to ensure that growth leads to inclusive and sustainable outcomes, particularly in lower-middle-income countries.

Received: 16 December 2024 | Revised: 13 May 2025 | Accepted: 22 May 2025

Conflicts of Interest 

The author declares that they have no conflicts of interest to this work.

Data Availability Statement

The data that support the findings of this study are openlyavailable in the Mendeley database at https://doi.org/10.17632/mby2hxrggr.1.

Author Contribution Statement

Panagiotis Karountzos: Conceptualization, Methodology, Validation, Resources, Data curation, Writing – original draft, writing – review & editing, Visualization, Project administration, Funding acquisition. Ioannis Gerogiannis: Data curation, Software, Validation, Formal Analysis, Resources, Writing – original draft, Visualization, Funding acquisition. Ioannis Douridas: Data curation, Software, Validation, Formal analysis, Resources, Writing – original draft, Visualization, Funding acquisition. Nikolaos Kapsimallis: Writing – original draft, Software, Validation, Formal analysis, Resources, Data curation. Ioannis Koukos: Resources, Data curation, Software, Validation, Formal analysis, Writing – original draft, Visualization, Funding acquisition. Paraskevi Filka:  Data curation, Software, Validation, Formal analysis, Resources, Writing – original draft, Visualization.