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Federal Reserve Bank of Dallas
Working Papers
Income inequality and political polarization: time series evidence over nine decades
John V. Duca
Jason L. Saving
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.


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John V. Duca & Jason L. Saving, Income inequality and political polarization: time series evidence over nine decades, Federal Reserve Bank of Dallas, Working Papers 1408, 01 Jan 2014.
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Keywords: political polarization; inequality
DOI: 10.24149/wp1408
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