Partisan Conflict and Income Distribution in the United States: A Nonparametric Causality-in-Quantiles Approach

Abstract

This study examines the predictive power of a partisan conflict index on income inequality. Our study adds to the existing literature by using the newly introduced nonparametric causality-in-quantile testing approach to examine how political polarization in the Unites States affects several measures of income inequality and distribution overtime. The study uses annual time-series data from 1917-2013. We find evidence of a causal relationship running from partisan conflict to income inequality, except at the upper end of the quantiles. The study suggests that a reduction in partisan conflict will lead to a more equal income distribution.

Keywords: Partisan Conflict; Income Distribution; Quantile Causality

JEL Classification: C22, O15