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The Great Recession and Racial Inequality: Evidence from Measures of Economic Well-Being

Thomas Masterson (), Ajit Zacharias, Fernando Rios-Avila () and Edward N. Wolff

Economics Working Paper Archive from Levy Economics Institute

Abstract: The Great Recession had a tremendous impact on low-income Americans, in particular black and Latino Americans. The losses in terms of employment and earnings are matched only by the losses in terms of real wealth. In many ways, however, these losses are merely a continuation of trends that have been unfolding for more than two decades. We examine the changes in overall economic well-being and inequality as well as changes in racial economic inequality over the Great Recession, using the period from 1989 to 2007 for historical context. We find that while racial inequality increased from 1989 to 2010, during the Great Recession racial inequality in terms of the Levy Institute Measure of Economic Well-Being (LIMEW) decreased. We find that changes in base income, taxes, and income from nonhome wealth during the Great Recession produced declines in overall inequality, while only taxes reduced between-group racial inequality.

Keywords: LIMEW; United States; Great Recession; Race; Distribution of Wealth; Distribution of Income (search for similar items in EconPapers)
JEL-codes: D31 D63 I31 J15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-pke
Date: 2017-01
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