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Impact of the 2008 Recession on Wealth-Adjusted Income and Inequality for U.S. Cohorts

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  • Naomi Zewde
  • Stephen Crystal

Abstract

ObjectiveTo examine the distributional effects of the 2008 recession and subsequent recovery across generational cohorts.MethodsUsing data from the Survey of Consumer Finances (2007–2016), we constructed a measure of economic well-being accounting for income, household size, and annuitized value of assets. We examine trajectories of adjusted income and inequality, using Gini coefficients and income shares by decile, for the overall population and by cohort during the recession and recovery.ResultsInequality declined temporarily during the recession, but reached new highs during the recovery. During recovery, population-level increases in economic resources were not reflected among below-median households, as the more concentrated financial assets rose while broader-based home equity and employment fell or remained stagnant. Inequality measures increased for cohorts in their primary working years (Generation-X and Baby Boomers), but not among the younger Millennials, who were at early stages of education, workforce entry, and household formation.DiscussionThe study illustrates an integrative approach to analyzing cumulative dis/advantage by considering interactions between historically consistent macrolevel events, such as economic shocks or policy choices affecting all cohorts, and the persistent life-course processes that tend to increase heterogeneity and inequality as cohorts age over time. Although recovery policies led to rapid recovery of financial asset values, they did not proportionately reach those below the median or their economic resource types. Results suggest that in a high-inequality environment, recovery policies from economic shocks may need tailoring to all levels of resources in order to achieve more equitable recovery outcomes and prevent exacerbating cohort inequality trajectories.

Suggested Citation

  • Naomi Zewde & Stephen Crystal, 2022. "Impact of the 2008 Recession on Wealth-Adjusted Income and Inequality for U.S. Cohorts," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 77(4), pages 780-789.
    • Handle: RePEc:oup:geronb:v:77:y:2022:i:4:p:780-789.
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    References listed on IDEAS

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    1. Natalia A. Kolesnikova & Yang Liu, 2011. "Jobless recoveries: causes and consequences," The Regional Economist, Federal Reserve Bank of St. Louis, issue Apr, pages 18-19.
    2. Arthur B kennickell, 2008. "The role of over-sampling of the wealthy in the survey of consumer finances," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The IFC's contribution to the 56th ISI Session, Lisbon, August 2007, volume 28, pages 403-408, Bank for International Settlements.
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