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Economy

How Income Inequality Makes Economic Downturns Worse

Urban counties in the United States were more likely to enter the Great Recession earlier when they had a larger gap between the rich and the poor.
People wait in line looking for jobs during a Job Fair at the Miami Dade College in Miami, Florida in 2009. Miami-Dade county went into recession in 2007.
People wait in line looking for jobs during a Job Fair at the Miami Dade College in Miami, Florida in 2009. Miami-Dade county went into recession in 2007.Carlos Barria/Reuters

Not only has income inequality surged in the United States and other advanced nations over the past couple of decades, it is worse in America’s largest, densest, most innovative and knowledge based cities and metro areas. High levels of inequality carve deep divides in our nation and its cities, lead to fraying social ties, rising crime and worsening health outcomes, and can also damage the prospects for innovation, job creation and economic growth in the long run.

A new study published in the Journal of Regional Studies by Paul Lewin, Philip Watson, and Anna Brown of the University of Idaho takes a close look at the connection between income inequality and the resilience of U.S. counties in the wake of the economic crisis.