Economic Recessions and Inequality: A Review of the Effects of Recessions and Policy Responses

Abstract

Income and wealth inequality have been a persistent and growing problem in the state of California over the last 40 years. This report focuses on the role of economic recessions—primarily the 2008 Great Recession and the 2020 COVID-19 Recession—on income and wealth inequality with particular attention to their impacts on housing access and affordability. By reviewing the literature, this report outlines the relationship between economic recessions and inequality, how the unique characteristics of economic recessions lead to disparate impacts, and the particular impact of economic recessions on housing access and affordability. Through a literature review, this report also provides a discussion and assessment of federal and state policies designed to address the impact of economic recessions. It concludes by presenting empirical findings from original research that demonstrate the unique impact of economic recessions on housing access and affordability in California and Los Angeles.

Keywords: Wealth Inequality, Income Inequality, Housing, Disadvantaged Neighborhoods, Great Recession, COVID-19 Pandemic

JEL Classification: I28, R1, Z18, R23