productivity (usually the traditional agriculture). Since low-productivity industries uses unskilled labour in large doses, the demand for unskilled labour softens relative to capital and skilled labour. As a result, unskilled wages lag behind, and the bottom of the income distribution suffers, and hence the worsening of income inequalities (Williamson, 1991).
Historical studies of advanced market economies also seem to suggest that evidences of the Kuznets curve is likely to be most striking for those countries whose technological history has been most unbalanced, and for whom agriculture has lagged most behind. The Kuznets curve is most likely to be absent in those countries which have been most successful in avoiding unbalanced productivity advance, such as Japan.
Based on the above tentative analysis of the possible explanation for the increase in income inequality in Malaysia during the first half of 1990s, it is obvious that both the labour market conditions and the educational system play significant role in influencing the pattern of income distribution. In addition, Robbin (1996) has argued that shifts in demand for labour in several developing countries - in response to increased competition from new entrants to the global markets (especially China and India which have huge reservoirs of cheap unskilled labour) - increases income inequality. He further argues that the desexualizing changes in demand are often associated with trade liberalization and in particular the skill-intensive requirements of contemporary trade. Tan and Batra (1997) also present strong evidence that technological change in developing countries favours skilled workers, thus worsening income disparities.
All these developments point to the need for a more detailed data on the nature of demand and supply of labour, including the quantity and quality of manpower produced by the educational system. It must be admitted that the Department of Statistics in Malaysia does collect labour market statistics through the annual Labour Force Survey (LFS). However, the LFSs are conducted primarily to collect information on the structure and distribution of the
