Rising Income Inequality Increasing Political Polarization? A State-Level Analysis over Two Decades

Abstract

While the nascent literature has begun to explore the causal link between a simultaneous trend of rising income inequality and political polarization in the United States, it focuses almost exclusively on a federal level analysis. How this relationship operates on a state level remains to be explored. The scope of this research, then, is to examine how statewide income inequality levels influence the political polarization in state legislatures. Using panel data over two decades, fixed effects and random effects models overall reveal that on the state level, the causal link between the two variables is ultimately not quite supported.