Education And Income Inequality

Simon Kuznets put forward the famous inverted U hypothesis in his classic paper published in 1955. Following Kuznets, Sherman Robinson made outstanding contributions to research on inverted U hypothesis, who in 1976 put forward a mathematical model that would allow for more rigorous studies on U hypothesis, according to the transfer of population within two sectors leading to change in income inequality. From then on, however, many of follow-up studies would focus more on the U hypothesis form while ignoring its economic significance.Kuznets in the two-sector economy, assumed that income inequality simulated in the modern sector were greater than that in the traditional sector, and Robinson (1976) also made the same assumptions in his model. But their difference is that Kuznets simulated relative income inequality, and Robinson simulated absolute income inequality. In fact, it can be simple to prove that, because the average income of the modern sector is usually larger than that of the traditional sector, when relative income inequality in the modern sector is greater than that in the traditional sector, it must be that the absolute income inequality in the modern sector is greater than that in the traditional sector. However, when it is assumed that the absolute income inequality in the modern sector is greater than traditional sector, converted to relative income inequality, there will be three possible circumstances that they might arise relative income inequality in the modern sector is greater, equal to or less than that in the traditional sector. In analysis, it is a relatively important and easily overlooked. Robinson (1976) ignored this difference. Although he also took into account the conversion between the absolute income inequality and the relative income inequality, but he assumed that the conversion was based on a specific probability distribution. If income distribution is changing, absolute income inequality transforms into relative income inequality facing uncertainty. The conversion method is too idealistic, while the reality is more complex. Usually, it is a normal assumption that the absolute income inequality in the modern sector is greater than traditional sector, while the opposite is unrealistic. However, whether the relative income inequality in the modern sector is greater...