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Inequality and the New Deal

Christian Belabed ()

No 166-2016, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: There is a large body of literature analyzing the onset of the Great Depression or the factors influencing economic recovery in the 1930s, especially the New Deal. The role of income inequality before and during the Great Depression, however, has almost never been discussed thoroughly. This paper attempts to answer two questions. Firstly, was inequality perceived as a problem by the Roosevelt administration? Secondly, did the New Deal incorporate these concerns such that economic policy design did take seriously the problem of inequality? Using official documents such as transcripts of Roosevelt's inaugural speeches, fireside chats and press conferences, this paper finds that top-end inequality was not recognized as a major political topic. Restoring the purchasing power of workers and farmers, however, appears to have been a political goal of the administration. The impact of New Deal policies on top-end income inequality or the wage share, however, can only be considered as modest. Only World War II and the long-term legislation of the New Deal may be considered successful in reducing top income and wealth shares and raising the wage share.

Keywords: Inequality; income and wealth distribution; new deal; Roosevelt; Great Depression (search for similar items in EconPapers)
JEL-codes: D31 D33 E02 E21 E25 G01 N12 N22 N32 N62 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2016
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac and nep-pke
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