To illustrate how urbanization affects inequality at the national level, Kuznets
(1955) used numerical examples and showed that, holdingwithin-rural and withinurban
income distributions and the urban–rural income ratio constant, the mere
population shift from the lower-income and lower-inequality rural sector to the
higher-income and higher-inequality urban sector could lead to an inverted-U
curve – inequality first increases, reaches a turning point, and then declines. The
bulk of the analysis in his paper follows this framework. In reality, however, it
is not realistic to assume that rural and urban inequalities and the urban–rural
income ratio would stay constant when urbanization takes place because many
other forces, highlighted earlier, are at work to shape income distribution. Nevertheless,
it is useful to see how urbanization alone has influenced the dynamics of
income distribution in the four countries and what it implies for their inequality in
the coming years as urbanization proceeds.