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The Capitol Since the Nineteenth Century: Political Polarization and Income Inequality in the United States

Author

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  • Rajashri Chakrabarti
  • Matthew Mazewski

Abstract

Even the most casual observer of American politics knows that today?s Republican and Democratic parties seem to disagree with one another on just about every issue under the sun. Some assume that this divide is merely an inevitable feature of a two-party system, while others reminisce about a golden era of bipartisan cooperation and hold out hope that a spirit of compromise might one day return to Washington. In this post, we present evidence that political polarization?or the trend toward more ideologically distinct and internally homogeneous parties?is not a recent development in the United States, although it has reached unprecedented levels in the last several years. We also show that polarization is strongly correlated with the extent of income inequality, but only weakly associated with the rate of economic growth. We offer several tentative explanations for these relationships, and discuss whether all forms of polarization are created equal.

Suggested Citation

  • Rajashri Chakrabarti & Matthew Mazewski, 2014. "The Capitol Since the Nineteenth Century: Political Polarization and Income Inequality in the United States," Liberty Street Economics 20140623a, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:86954
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    Keywords

    Inequality; DW Nominate; Dyfunctionality; Polarization;

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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