Inequality and Poverty

This chapter assesses how the rewards of sustained economic growth were distributed over time. The evolution of income inequality resembles a wide inverted U with a peak in 1916, and a Kuznets curve results when the Gini coefficient is plotted against real per capita income. The functional distribution of income led personal income distribution until the early 1950s, while the dispersion of labour incomes took over from then onwards. Although growth and inequality do not move together over time, in the last century, the main phases of economic growth went hand-in-hand with inequality decline. The substantial fall in absolute poverty resulted from growth but also from inequality reduction during the interwar period and the late 1950s, and was eradicated by 1975.