ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Economic growth may have a negative impact on income inequality since economic growth is often positively associated with higher investments, higher employment-generating processes and higher employment, hence giving greater access to jobs and income to a larger number of people.

Detailed explanation-2: -Some of key factors behind the increase in within-country income inequality noted in the literature include technological progress, globalization, commodity price cycles, and domestic economic policies such as redistributive fiscal policies, labor and product market policies.

Detailed explanation-3: -At low-income levels, inequality tends to boost economic growth by increasing physical capital investment. As income levels increase, human capital becomes more important than physical capital, and inequality tends to impede economic growth by affecting human capital accumulation.

Detailed explanation-4: -The curve describes a U-shaped relationship between inequality and growth: inequality first increases and later decreases in the process of economic development. Kuznets explained this in terms of a shift from the rural/agricultural sector of the economy to an urban/industrial sector.