American Economic Review: Vol. 104 No. 5 (May 2014)

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Disparities in Wealth Accumulation and Loss from the Great Recession and Beyond

Article Citation

McKernan, Signe-Mary, Caroline Ratcliffe, Eugene Steuerle, and Sisi Zhang. 2014. "Disparities in Wealth Accumulation and Loss from the Great Recession and Beyond." American Economic Review, 104(5): 240-44.

DOI: 10.1257/aer.104.5.240

Abstract

Using over two decades of Survey of Consumer Finances data and a pseudo-panel technique, we measure the impact of the Great Recession on US family wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories. Our synthetic cohort-level models find that the Great Recession reduced average family wealth by 28.5 percent–nearly double the magnitude of previous pre-post mean descriptive estimates and double the magnitude of any previous recession since the 1980s. The housing market was only part of the story; all major wealth components fell as a result of the Great Recession.

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Authors

McKernan, Signe-Mary (Urban Institute, Washington, DC)
Ratcliffe, Caroline (Urban Institute, Washington, DC)
Steuerle, Eugene (Urban Institute, Washington, DC)
Zhang, Sisi (Shanghai U Finance and Economics)

JEL Classifications

D14: Household Saving; Personal Finance
D31: Personal Income, Wealth, and Their Distributions
D91: Intertemporal Household Choice; Life Cycle Models and Saving
E32: Business Fluctuations; Cycles
G01: Financial Crises


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