Working Paper: NBER ID: w29050
Authors: Martin Ravallion
Abstract: Thirty years of distributional data are used to study the short-term impacts of popular macroeconomic indicators on real household incomes from the poorest to the richest Americans. The appropriate weights on unemployment versus inflation vary across the distribution. The unemployment rate matters at all levels, but especially so for the poorest. Inflation rates matter at middle incomes, though Okun’s famous Misery Index only performs well for the top income groups. GDP growth matters at all levels and proportionately more for the poorest, though only via the unemployment rate. Recessions are poverty-increasing, and skewness-decreasing, but with ambiguous effects on overall inequality.
Keywords: No keywords provided
JEL Codes: D31; E31; E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment Rate (J64) | Real Household Incomes (G59) |
| Inflation Rates (E31) | Real Household Incomes (G59) |
| GDP Growth Rate (O49) | Real Household Incomes (G59) |
| GDP Growth Rate (O49) | Unemployment Rate (J64) |
| Higher Unemployment Rates (J64) | Increased Poverty (I32) |
| Higher Unemployment Rates (J64) | Reduced Skewness in Income Distribution (D31) |
| Inflation Rates (E31) | Real Household Incomes (Middle-Income Groups) (D31) |