Conflict, Legitimacy and Government Reform: Equitable Allocation of ...

48 KPI Congress XI
accelerated rate, income of workers in these fields increased at a faster
rate compared to other fields, leading to inequality.
Third, in urban areas, income of workers in different occupations
varies. Skilled workers can increase their wages above unskilled workers
and profits of employers who are factory owners increase at an
accelerated rate, thus widening inequality.
Up to a certain point, these inequality would decline gradually due
to several reasons. For instance, when saving concentration dissipates
because other groups have higher income and higher saving
opportunities. At the same time, new groups with greater economic
power that become successful demand the government to implement
public policies to mitigate income inequality.
As for Thailand, Duangmanee Laowakun applied Kuznets’ method
to calculate income level that might be a turning point that could reduce
income inequality value. It was found that this probable threshold might
be the income per capital of 45,215 baht in 1994 (Duagmanee and
associates, 2009: 3-22) 2 and it was found that genie coefficients showed a
declining trend during 1991-1998 but the values perked up again in
2000 and 2006. Therefore, such turning point did not really occur.
Why has income distribution inequality in Thailand not been
reduced as envisaged in Kuznets’ study?
History tells us that there are two different approaches to mitigate
income inequality. One way is to use taxation and money transfer to
create wealth and income equality. Another approach is to allow social
forces to exert pressure to mitigate inequality, for example, a labor union
succeeds in negotiating for a higher wage with the employer. In practice,
many countries use both approaches, that is, having both public policy
and social pressure.
The countries studied by Kuznets showed a more equitable income
distribution because those in power, that is, governments were pressured
2 Pranee’s study (2002) also adopted Kuznets’ concept. It was found that the turning
point likely occurred in 1993 when annual income per capita was 40,436 baht.