It may not come as a surprise to some Americans that one of the biggest factors in rising income inequality may be political and not economic. At the Ohio State University sociologists found two primary factors for increasing income disparity between 1978 and 2011: more college-educated adults and what they called “political factors.”
However, the study’s lead author noted that after 1980 the rise in highly educated adults became less relevant near the end of the 80s. The study found that during the terms of presidential administrations that were not labor-friendly, income disparity rose.
The study employed things like state-by-state inequality levels and IRS income data, which is highly sensitive to fluctuation in the incomes of the top 1 percent. The study found no other political factors that influenced income disparity like the attitudes of presidential administrations. Congress and state governors were found to have no effect, while state legislatures only had a small effect.
Two other factors played small, but important roles. Manufacturing employment had a fairly strong relationship with income inequality, with researchers finding that a 10 percent decrease in this employment would produce about a 3.1 percent increase in inequality.
The influence of presidential administrations remained even after looking at more than 20 other variables like the number of people employed in finance or the number of people employed in rural occupations. The authors of the study noted that economists have been citing these political factors and others from the study for years as reasons for rapid income inequality expansion.