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Consumption and Income Inequality and the Great Recession

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  • Bruce D. Meyer
  • James X. Sullivan

Abstract

We examine changes in consumption and income inequality between 2000 and 2011. During the most recent recession, unemployment rose and asset values declined sharply. We investigate how the recession affected inequality while addressing concerns about underreporting in consumption data. Income inequality rose throughout the period from 2000 to 2011. The 90/10 ratio was 19 percent higher at the end of this period than at the beginning. In contrast, consumption inequality rose during the first half of this period but then fell after 2005. By 2011, the 90/10 ratio for consumption was slightly lower than it was in 2000.

Suggested Citation

  • Bruce D. Meyer & James X. Sullivan, 2013. "Consumption and Income Inequality and the Great Recession," American Economic Review, American Economic Association, vol. 103(3), pages 178-183, May.
  • Handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:178-83
    Note: DOI: 10.1257/aer.103.3.178
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    References listed on IDEAS

    as
    1. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2009. "The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences," Working Papers 0903, Harris School of Public Policy Studies, University of Chicago.
    2. David A. Benson & Mariacristina De Nardi & Eric French, 2012. "Consumption and the Great Recession," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 36(Q I), pages 1-16.
    3. Jonathan Fisher & David S. Johnson & Timothy M. Smeeding, 2015. "Inequality of Income and Consumption in the U.S.: Measuring the Trends in Inequality from 1984 to 2011 for the Same Individuals," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(4), pages 630-650, December.
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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