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Abstract

This paper examined profits, productivity, and poverty in the United States from 1961 through 2002. Results indicated that the "great divide" thesis regarding the U.S. economy before and after the Reagan administration depends on which measure of the economy is the focus of attention. In addition, on some measures where before and after differences were detected, the nature of those differences was paradoxical. Corporate profits as a share of national income, for example, were highest in Democratic rather than Republican administrations and despite the increased income inequality of the post-Reagan years, individual and family poverty rates remained relatively constant after edging upward from the 1970s but still below 1960s highs. Further, findings provide some evidence corroborating neoclassic economic theory in regard to incentives and productivity and they present a challenge to activists who equate poverty as a natural or an inevitable byproduct of the more market-driven fiscal and monetary policies of the 1980s and 1990s.

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