Inequality and development: Evidence from semiparametric estimation with panel data

Evidences from nonparametric and semiparametric unbalanced panel data models with fixed effects show that Kuznet's inverted-U relationship is confirmed when economic development reaches a threshold. The model tests justify semiparametric specification. The integrated net contribution of control variables to inequality reduction is significant.

► Nonparametric and semiparametric models on Kuznet's inequality-development relationship. ► Sample of 75 countries for the period 1962-2003. ► Kuznet's inverted-U relationship confirmed when development has reached a threshold. ► The result is robust whether or not the control variables are included in the model. ► The findings throw new lights on the inequality-development relationship.