Political Donations & Economic Inequality: Evidence from Campaign Contributions

• In Event: The Political Economy of Inequality: From Campaign Finance to Radical Voting (Pre-Recorded)

Abstract

Which is the relationship between income inequality and political donations? We address this question making use of all federal campaign contributions from individuals between 1979 and 2018. We reconstruct the income distribution at the census tract level and analyze the impact of economic inequality on the amount of contributions over time, for different types of elections and for the two main parties of the recipients. In this fashion, we describe the remarkable rise in the number of campaign contributions started in the earliest 2000s. We find that both inequality between and within these very small geographies affect positively the amount contributed, showing that the political influence of the richest individuals has substantially grown over time in these decades. In other words, the rise in contributions is more than proportional to the rise of economic disparity, both by census tract and by county. Finally, we explore the effects of tax policies and campaign finance reforms on the relationship between the income distribution and political contributions.

Authors

• Alberto Parmigiani, London School of Economics

• Valentino Larcinese, London School of EConomics