Income Inequality and County Economic Resistance to Job Loss during the Great Recession

Abstract

This paper examines the effects of income inequality on short-run changes in growth in the context of the most recent U.S. recession in both urban and rural counties. Resistance to job loss in the Great Recession is modeled as a function of local income inequality, controlling for community capital assets, and the size and structure of the local population and economy. Regression results suggest that the effect of local inequality on resilience depends on the size of a county’s population. High inequality increases the recessionary employment drop in counties with large populations but reduces the employment drop in the smallest counties.