Rising income inequality in the U.S. was fuelled by Ronald Reagan’s attacks on union strength, and continued by Bill Clinton’s financial deregulation

Income inequality in the U.S. has grown rapidly over the past thirty years, but almost no research has found that shifts in government policy led to greater inequality and the associated stagnation in middle incomes. In new research, David Jacobs finds evidence of the role of politics in determining inequality, by analyzing union strength. He finds that prior to the election of President Ronald Reagan, a 10 percent increase in union strength would have led to a 2.7 percent fall in income inequality, but this union effect disappears after 1981. His results show that Reagan and subsequent neoliberal presidents, including Democrat Bill Clinton, contributed to the growth in inequality by continuing to attack unions and deregulating financial markets.