ABSTRACT
A simple and convenient way to approach the twin problems of poverty and income distribution is to utilize the production-possibility framework. Two countries with the same levels of gross national product (GNP) and income per capita may have entirely different production and consumption structures depending on whether or not personal incomes are distributed equitably. The Kuznets thesis purports to explain increases of relative poverty and marginalization during development by suggesting that as per capita income rises, inequality in income distribution also rises, until the point at which inequalities taper off. Simon Kuznets put forward the proposition that the relationship between the level of per-capita GNP and inequality in the distribution of income may take the form of an inverted U. The degree of income inequality in rural areas is somewhat less than in the urban areas and, hence, less unequal than the average for the economy.
