Surviving the Great Recession: the influence of income inequality in US urban counties

Abstract

While there has been extensive research on the role of income inequality in economic growth, there has been less investigation as to the role of income inequality on economic resilience. This paper addresses the relationship between income inequality and resilience by evaluating the vulnerability of urban counties in the United States entering recession between 2006 and 2010 and tests whether income inequality contributes to their probability of recession survival. A Cox proportional hazards model is used to determine factors contributing toward urban counties’ resilience to the external shock of the Great Recession; the research is focused on the relationship between the level of income inequality in a county and its recession risk. It is found that areas with increased income inequality entered recession earlier.