Great Recession and Income Inequality: a State-level Analysis

Abstract

This paper analyzes the impact of the Great Recession on the income inequalities of racial and ethnic groups, namely whites, blacks, Hispanics, and Asians, in the USA. As the US economy fell into a deep recession during the late 2000s, the unemployment rate skyrocketed, the stock markets crashed, and incomes significantly declined. Using the American Community Survey from 2005 to 2016, this paper presents novel results that suggest the Great Recession not only increased the overall income inequality in the USA but also within-and between-group income inequalities among racial and ethnic groups. Furthermore, the impact of the recession on inequality is not uniform across these racial and ethnic groups. More specifically, during the Great Recession, inequality among blacks, Hispanics, and Asians has significantly increased, while whites experienced only a moderate increase in income inequality. The findings of this work are both timely and relevant, especially in terms of public policy. Policymakers cognizant of problems associated with within-and between-group inequalities might concentrate on policies alleviating the impact of the recession, especially those geared toward racial and ethnic minorities.

The Great Recession and Economic Outcomes for Indigenous Peoples in the United States

“…As a result, individuals employed in these industries were at higher risk of job and/or earnings loss. To a large extent, these industries tend to have high proportions of minority workers (Yaya 2018). My results show that the earnings for both AIAN and NHPI in these occupations took some of the biggest relative earnings losses over the Great Recession.…”

Income Inequality, Social Comparison, and Happiness in the United States

“…Note that I included cross-level interactions as suggested by Heisig and Schaeffer (2019) and Rudnev and Vauclair (2018) in the three models. The within-gender-ethnicity inequality measures in these models capture the gender and racial-ethnic differentials (Critzer 1998; Hero and Levy 2016; Larraz 2015; Manduca 2018; Yaya 2018; Yitzhaki and Lerman 1997).…”

“…So is the state-level average income to reflect a state’s affluence. Gender and race are both core concerns of income inequality, often analyzed by decomposition analysis (Hero and Levy 2016; Larraz 2015; Liao 2016; Manduca 2018; Yaya 2018; Yitzhaki and Lerman 1997). Analyzing income dynamics within the American states is important because of state-level political and socioeconomic specificities (Critzer 1998; Hero and Levy 2016).…”

Do transfers lower inequality between households? Demographic evidence from Distributional National Accounts

“…23 23 For analyses of the impact of the Great Recession on inequality by race, see Compton et al. (2018) and Yaya (2018). …”

“…The reason for this was that AMI was constructed in order to be comparable to census money income, which does include transfers such as social security and unemployment insurance. They have been split out separately in this exercise in order to identify their impact.21 Employer and employee contributions for government social insurance are netted out in the subtotal for this category, although they are included in other Table2.9 line item subtotals that are subsequently distributed.22 The share of transfers in this chart includes the share of personal income from the NPISH adjustment (0.1%-0.2%).23 For analyses of the impact of the Great Recession on inequality by race, seeCompton et al (2018) andYaya (2018).24 Other economically significant transfers included in this program are: railroad retirement, pension benefit guaranty, veterans' benefits, black lung benefits, educational assistance, medical assistance, supplemental unemployment, and WIC program.25 This is consistent with Census Bureau categorizations and disaggregations for the published inequality statistics.26 These groups are mutually exclusive. If a householder responds "Black" in addition to other races, he or she is coded as "Black" and…”