Great Recession and Income Inequality: a State-level Analysis


This paper analyzes the impact of the Great Recession on the income inequalities of racial and ethnic groups, namely whites, blacks, Hispanics, and Asians, in the USA. As the US economy fell into a deep recession during the late 2000s, the unemployment rate skyrocketed, the stock markets crashed, and incomes significantly declined. Using the American Community Survey from 2005 to 2016, this paper presents novel results that suggest the Great Recession not only increased the overall income inequality in the USA but also within- and between-group income inequalities among racial and ethnic groups. Furthermore, the impact of the recession on inequality is not uniform across these racial and ethnic groups. More specifically, during the Great Recession, inequality among blacks, Hispanics, and Asians has significantly increased, while whites experienced only a moderate increase in income inequality. The findings of this work are both timely and relevant, especially in terms of public policy. Policymakers cognizant of problems associated with within- and between-group inequalities might concentrate on policies alleviating the impact of the recession, especially those geared toward racial and ethnic minorities.

This is a preview of subscription content, access via your institution.

Fig. 1
Fig. 2
Fig. 3


  1. 1.

    For a comprehensive analysis of racial and ethnic groups’ earnings, poverty, education, and health in the USA, see (Pew Research Center 2016) and specifically for Asians, see Segal et al. (2002).

  2. 2.

    For a general overview of income inequality in the USA, see Gottschalk and Danziger (2005).

  3. 3.

    In few instances, the respondents reported negative income due to possible losses in investment or self-employment. These negative values were converted to zero. The number of negative income responses is very limited. Furthermore, in the literature, the respondents with negative income values are either removed (see Zandvakili (1999)) or converted into zero (see Hoover and Yaya (2010, 2011). It should also be noted that the personal income variable in ACS is top coded to maintain the anonymity of the respondents.

  4. 4.


  1. Aigner DJ, Heins AJ. On the determinants of income equality. Am Econ Rev. 1967;57(1):175–84.

    Google Scholar 

  2. Argento R, Bryant VL, Sabelhaus J. Early withdrawals from retirement accounts during the Great Recession. Contemp Econ Policy. 2015;33(1):1–16.

    Article  Google Scholar 

  3. Bucknor, Cherrie. Measuring recovery: young black America part three: employment, un-employment, and the incomplete recovery. CEPR Reports and Issue Briefs 2015–16, Center for Economic and Policy Research (2015).

  4. Cagney KA, Browning CR, Iveniuk J, English N. The onset of depression during the Great Recession: foreclosure and older adult mental health. Am J Public Health. 2014;104(3):498–505.

    Article  Google Scholar 

  5. Cho Y, Newhouse D. How did the Great Recession affect different types of workers? Evidence from 17 Middle-Income Countries. World Development. 2013;41(Supplement C):31–50.

    Article  Google Scholar 

  6. Couch KA, Fairlie R. Last hired, first fired? Black-White unemployment and the business cycle. Demography. 2010;47:227.

    Article  Google Scholar 

  7. Cynamon BZ, Fazzari SM. Inequality, the Great Recession and slow recovery. Camb J Econ. 2016;40(2):373–99.

    Article  Google Scholar 

  8. Fisher JD, Johnson DS, Smeeding TM. Measuring the trends in inequality of individuals and families: income and consumption. Am Econ Rev. 2013;103(3):184–8.

    Article  Google Scholar 

  9. Gottschalk P, Danziger S. Inequality of wage rates, earnings and family income in the United States, 1975-2002. Rev Income Wealth. 2005;51:231–54.

    Article  Google Scholar 

  10. Hellebrandt, Tomas. Income inequality developments in the Great Recession. SSRN Scholarly Paper. Rochester, NY: Social Science Research Network, April 1, 2014.

  11. Holahan J. The 2007-09 recession and health insurance coverage. Health Aff. 2011;30(1):145–52.

    Article  Google Scholar 

  12. Hoover GA, Yaya ME. Racial/ethnic differences in income inequality across US regions. The Review of Black Political Economy. 2010;37(2):79–114.

    Article  Google Scholar 

  13. Hoover GA, Yaya ME. Racial/ethnic income inequality responses to a government maintenance program in the United States. Public Finance Review. 2011;39(3):462–78.

    Article  Google Scholar 

  14. Hoover GA, Giedeman DC, Dibooglu S. Income inequality and the business cycle: a threshold cointegration approach. Econ Syst. 2009;33(3):278–92.

    Article  Google Scholar 

  15. Kochhar R, and R Fry. Economic growth and income inequality. Pew Research Center (Dec. 12, 2014).

  16. Kuznets S. Wealth inequality has widened along racial, ethnic lines since end of Great Recession. Am Econ Rev. 1955;45(1):1–28.

    Google Scholar 

  17. Lambert PJ, Richard Aronson J. Inequality decomposition analysis and the Gini Coefficient revisited. Econ J. 1993;103(420):1221–7.

    Article  Google Scholar 

  18. Masterson T and Zacharias A and Rios-Avila F and Wolff EN, The Great Recession and racial inequality: evidence from measures of economic well-Being. Levy Economics Institute, Working Papers Series (2017).

  19. McFall H. Brooke. Crash and wait? The impact of the Great Recession on the retirement plans of older Americans. Am Econ Rev. 2011;101(3):40–4.

    Article  Google Scholar 

  20. Meyer BD, Sullivan JX. Consumption and income inequality and the Great Recession. Am Econ Rev. 2013;103(3):178–83.

    Article  Google Scholar 

  21. Mollick AV. Income inequality in the U.S.: the Kuznets hypothesis revisited. Economic Systems. 2012;36(1):127–44.

    Article  Google Scholar 

  22. Mookherjee D, Shorrocks AF. A decomposition analysis of the trend in UK income inequality. Econ J. 1982;92(368):886–902. 23

    Article  Google Scholar 

  23. Orrenius P and M Zavodny. Trends in poverty and inequality among Hispanics. In the economics of inequality, poverty, and discrimination in the 21st Century , edited by Rycroft Robert S., (2013): 217–35. Santa Barbara, CA: ABC-CLIO.

  24. Pew Research Center. On views of race and inequality, Blacks and Whites are worlds apart. (2016).

  25. Pfeffer FT, Danziger S, Schoeni RF. Wealth disparities before and after the Great Recession. The ANNALS of the American Academy of Political and Social Science. 2013;650(1):98–123.

    Article  Google Scholar 

  26. Piketty T, Saez E. Top incomes and the Great Recession: recent evolutions and policy implications. IMF Economic Review. 2013;61(3):456–78.

    Article  Google Scholar 

  27. Pyatt G. On the interpretation and disaggregation of Gini coefficients. Econ J. 1976;86(342):243–55.

    Article  Google Scholar 

  28. Rossi N, Toniolo G, Vecchi G. Is the Kuznets curve still alive? Evidence from Italian household budgets, 1881-1961. J Econ Hist. 2001;61(4):904–25.

    Article  Google Scholar 

  29. Salgado MF, Figari F, Sutherland H, Tumino A. Welfare compensation for unemployment in the Great Recession. Rev Income Wealth. 2014;60:177–204.

    Article  Google Scholar 

  30. Segal EA, Kilty KM, Rebecca Y. Kim Social and economic inequality and Asian Americans in the United States. J Poverty. 2002;6(4):5–21.

    Article  Google Scholar 

  31. Zandvakili S. Income inequality among female heads of households: racial inequality re-considered. Economica. 1999;66:119–33.

    Article  Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Mehmet E. Yaya.

Ethics declarations

Conflict of interest

The author declares that there is no conflict of interest.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Yaya, M.E. Great Recession and Income Inequality: a State-level Analysis. J Econ Race Policy 1, 112–125 (2018).

Download citation


  • Great Recession
  • Income inequality
  • Race
  • Ethnic minorities