Does Political Dominance Impact Economic Inequality?

Abstract

This paper examines the relationship between political dominance and economic inequality in the U.S. for the years 1947-2017. Conventional wisdom suggests that when Democrats control Congress and the Presidency, they will pursue policy goals that are inequality reducing through government actions. Republican controlled Congresses and presidencies are presumed to pursue economic growth and limited government intervention policies. However, are these beliefs true? Economic inequality is a broad term with various interpretations. In this paper we adopt a different approach. We consider the distribution of utility that individuals possess, while understanding that of course this depends in part on their income levels. We do find that Democratic presidential administrations correlate with lowering economic inequality and when Republican presidents hold the White House this correlates with increasing levels of economic inequality. However, we find that dominance by a given party in Congress has a negligible impact.