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Understanding Income Inequality in the United States

In a democracy where the median income is substantially less than the mean, why does the poor majority not implement a significant level of redistribution? Despite fears that democracy would empower the poor majority to such ends, constituents of below average income have a mixed record of utilizing democracy to ameliorate economic inequality in the United States. How do we understand this puzzle? Why does the poor majority not maintain a constant level of redistribution in a democracy? In the first part of my dissertation, I provide a game theoretic answer based on historical research which is in accord with the broad trend in both policy and economic inequality in the United States. In the second part of my dissertation, I present new income tax data for New York City and Philadelphia for the 1860s. Despite limitations, this data offers a glimpse at the income shares of the top 1, 0.1, and 0.01 percent of the population in the two premier US cities during an important period in our economic history – a glimpse previously not possible. As we shall see, the income shares of top one percent in New York City in the 1860s and mid-2000s are comparable. This combined with recent data and our knowledge of US history highlights new questions.