This paper is threefold in purpose; it aims to explore the relationship between the growth of manufacturing and service sectors and income inequality, determine if GDP growth helps reduce income inequality, and establish the existence of the Kuznets Curve from 1967-2017. The data supports an inverse relationship between growth in the manufacturing sector and income inequality however is not sufficient enough to conclude growth in the manufacturing sector impacts income inequality. Growth of GDP is shown to decrease income inequality which supports the notion that “a rising tide lifts all boats” and makes everyone better off than before. The positive impacts of GDP growth are equal in magnitude to the negative impacts of the service sector so if the economy grows but the service sector grows faster inequality will increase. Finally, the data confirms the existence of a Kuznets Curve in the United States over this time period.
Recommended CitationPaton, Josh, "An Examination of Sectoral Growth’s Impact on Income Inequality in the United States" (2018). Honors Projects in Economics. Paper 28.