The Financial Crisis and ensuing Great Recession caused enormous hardship for households. Using original datasets, we examine the effects of the recession on a population many might think had nothing left to lose: low- and moderate-income households in the Detroit metropolitan area. We find that the Great Recession in fact imposed significant costs on these households, reducing employment and assets and increasing hardships in a wide variety of ways. Our findings suggest the need for more robust safety net policies and financial services that can help cushion the blows from sharp reductions in incomes and assets.
The authors thank the Washington Center for Equitable Growth for their financial support for the project. Terry Adams, Joel Devonshire, John DiNardo, Jim Hines, Frost Hubbard, Jeff Smith, Kelsey Smith, and Elena Yudovina provided invaluable technical advice and assistance with this project. Schaffa gratefully acknowledges support from the NIA training grant to the Population Studies Center at the University of Michigan (T32 AG000221).
Barr, Michael S. and Schaffa, Daniel, Nothing Left to Lose? Changes Experienced by Detroit Low- and Moderate-Income Households During the Great Recession (September 8, 2016). Washington Center for Equitable Growth Working Paper, U of Michigan Law & Econ Research Paper No. 16-019, U of Michigan Public Law Research Paper No. 518, Available at SSRN: https://ssrn.com/abstract=2836589 or http://dx.doi.org/10.2139/ssrn.2836589