In contrast to conventional parametric quadratic approaches for analyzing the Kuznets' hypothesis, which states that income inequality rises first but then falls over the cycle of economic development, we apply a semi-parametric partially linear regression to investigate the existence of such an inverted-U relationship between inequality and development. We find overwhelming evidence in support of an inverted-U curve and, thus, confirm the validity of the Kuznets' hypothesis for a large sample of countries. Moreover, our results are robust to different control variables and to an alternative inequality measure. Journal of Comparative Economics 34 (3) (2006) 634–647.