Income inequality and political polarization: time series evidence over nine decades

John Duca and Jason Saving

No 1408, Working Papers from Federal Reserve Bank of Dallas

Abstract: Rising income inequality and political polarization have led some to hypothesize that the two are causally linked. Properly interpreting such correlations is complicated by the multiple factors that drive each of these phenomena, potential feedbacks between inequality and polarization, measurement issues, and statistical challenges for modeling non-stationary variables. We find that a more precise measure of inequality (the inverted Pareto-Lorenz coefficient) is statistically related to polarization while a less precise one (top 1% income share) is not, and that there are bi-directional feedbacks between polarization and inequality. Findings support a nuanced view of the links between polarization and inequality.

Keywords: political polarization; inequality (search for similar items in EconPapers)
JEL-codes: D31 D63 D72 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014-01-01
New Economics Papers: this item is included in nep-ltv and nep-pol
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Citations: View citations in EconPapers (3)

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Journal Article: Income Inequality and Political Polarization: Time Series Evidence Over Nine Decades (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:1408

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DOI: 10.24149/wp1408

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