The Ups and Downs of Household Income

Baskar Prabhakar, Deepika; Valletta, Robert G.

Journal Article

The Ups and Downs of Household Income

Abstract: Changes in overall economic conditions may affect real household income levels and also how income is distributed across households. Analysis using annual data from 1967 to 2023 shows that the adverse effects of unemployment and inflation have been generally uniform across the household income distribution. However, the pandemic recession showed a different pattern: Historically large government transfers via enhanced unemployment insurance benefits largely offset the adverse economic effects of surging unemployment for lower-income households. Results also show that sustained economic expansions have beneficial effects, especially for lower-income households.