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Heterogeneity in the Impact of Economic Cycles and the Great Recession: Effects within and across the Income Distribution

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  • Marianne Bitler
  • Hilary Hoynes

Abstract

In this paper, we examine the effects of economic cycles on low- to moderate-income families. We use variation across states and over time to estimate the effects of cycles on the distribution of income, using fine gradations of the household income-to-poverty ratio. We also explore how the effects of cycles affect the risk of falling into poverty across demographic groups, focusing on age, race/ethnicity, and family type. We conclude by testing to see whether these relationships have changed in the Great Recession. We discuss the results in light of the changes in the social safety net in recent decades.

Suggested Citation

  • Marianne Bitler & Hilary Hoynes, 2015. "Heterogeneity in the Impact of Economic Cycles and the Great Recession: Effects within and across the Income Distribution," American Economic Review, American Economic Association, vol. 105(5), pages 154-160, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:154-60
    Note: DOI: 10.1257/aer.p20151055
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    References listed on IDEAS

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    1. James R. Hines & Hilary Hoynes & Alan B. Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    2. Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
    3. James Hines & Hilary Hoynes & Alan Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    4. Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
    5. Bruce D. Meyer & James X. Sullivan, 2011. "Consumption and Income Poverty Over the Business Cycle," Research in Labor Economics, in: Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution, pages 51-82, Emerald Group Publishing Limited.
    6. David M. Cutler & Lawrence F. Katz, 1991. "Macroeconomic Performance and the Disadvantaged," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 1-74.
    7. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2014. "Child Poverty and the Great Recession in the United States," Papers inwopa724, Innocenti Working Papers.
    8. Craig Gundersen & James Ziliak, 2004. "Poverty and macroeconomic performance across space, race, and family structure," Demography, Springer;Population Association of America (PAA), vol. 41(1), pages 61-86, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Hilary Hoynes & Mark Stabile, 2019. "How Do the US and Canadian Social Safety Nets Compare for Women and Children?," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 253-288.
    2. Yasenov, Vasil, 2020. "Who Can Work from Home?," IZA Discussion Papers 13197, Institute of Labor Economics (IZA).
    3. Furceri, Davide & Loungani, Prakash & Zdzienicka, Aleksandra, 2018. "The effects of monetary policy shocks on inequality," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 168-186.
    4. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Child Poverty, the Great Recession, and the Social Safety Net in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(2), pages 358-389, March.
    5. Erik Scherpf & Benjamin Cerf, 2019. "Local Labor Demand and Program Participation Dynamics: Evidence from New York SNAP Administrative Records," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(2), pages 394-425, March.
    6. Hyejin Jung & Inseok Seo & Kyujin Jung, 2018. "Mediating Role of Entrepreneurship in Explaining the Association Between Income Inequality and Regional Economic Performance," Economic Development Quarterly, , vol. 32(2), pages 135-145, May.
    7. Hilary Hoynes & Diane Whitmore Schanzenbach & Douglas Almond, 2016. "Long-Run Impacts of Childhood Access to the Safety Net," American Economic Review, American Economic Association, vol. 106(4), pages 903-934, April.
    8. Vanda Almeida, 2020. "Income Inequality and Redistribution in the Aftermath of the 2007-2008 Crisis: The U.S. Case," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(1), pages 77-114, March.
    9. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance & Xavier Ragot, 2015. "The redistributive effects of QE," Working Papers hal-03459824, HAL.
    10. Marcella Alsan & Crystal Yang, 2018. "Fear and the Safety Net: Evidence from Secure Communities," NBER Working Papers 24731, National Bureau of Economic Research, Inc.
    11. Randall Akee & Maggie R. Jones & Sonya R. Porter, 2017. "Racial Disparity in an Era of Increasing Income Inequality," CARRA Working Papers 2017-01, Center for Economic Studies, U.S. Census Bureau.
    12. Pasch, Sandra & Dany-Knedlik, Geraldine, 2020. "On the cyclicity of the income distribution," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224654, Verein für Socialpolitik / German Economic Association.
    13. Paolo Caro, 2020. "Decomposing Personal Income Tax Redistribution with Application to Italy," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 113-129, March.
    14. Kim, Ji Hwan & Lee, Jungmin & Lee, Kyungho, 2023. "Minimum wage, social insurance mandate, and working hours," Journal of Public Economics, Elsevier, vol. 225(C).
    15. Casiraghi, Marco & Gaiotti, Eugenio & Rodano, Lisa & Secchi, Alessandro, 2018. "A “reverse Robin Hood”? The distributional implications of non-standard monetary policy for Italian households," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 215-235.
    16. repec:bin:bpeajo:v:49:y:2019:i:2018-01:p:89-150 is not listed on IDEAS
    17. Yasenov, Vasil, 2020. "Who Can Work from Home?," OSF Preprints 89k47, Center for Open Science.
    18. Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2018. "Safety Nets Investments in Children," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 89-150.
    19. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance & Xavier Ragot, 2015. "The redistributive effects of QE," Working Papers hal-03459824, HAL.
    20. Geraldine Dany-Knedlik & Alexander Kriwoluzky & Sandra Pasch, 2021. "Income Business Cycles," Discussion Papers of DIW Berlin 1964, DIW Berlin, German Institute for Economic Research.
    21. Erik Scherpf & Benjamin Cerf, 2016. "Local Labor Demand and Program Participation Dynamics," CARRA Working Papers 2016-10, Center for Economic Studies, U.S. Census Bureau.
    22. repec:hal:spmain:info:hdl:2441/16fo245k6a8q1pss5r3giac4m2 is not listed on IDEAS
    23. Hao Dong & Zhenghui Li & Pierre Failler, 2020. "The Impact of Business Cycle on Health Financing: Subsidized, Voluntary and Out-of-Pocket Health Spending," IJERPH, MDPI, vol. 17(6), pages 1-24, March.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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