Housing Bubbles and Income Inequality Public Deposited

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  • March 21, 2019
  • Graczyk, Andrew
    • Affiliation: College of Arts and Sciences, Department of Economics
  • After a century of decline, income inequality has grown dramatically over the last several decades and is now one of the principal economic realities of our time. The recent housing bubbles and global financial crises have shown us that the Great Moderation may be over, and income inequality may be a problem with which the next generation of economists will have to contend. There is a growing body of literature showing that income inequality has the potential to fundamentally alter the very shape of the economic landscape. In this small collection of papers I show just a few ways that the presence of income inequality can alter our expectations about how a market should act in response to shocks, and the ways that shocks to a market in turn can accelerate the growth of inequality. The first paper, Regressive Welfare Effects of Housing Bubbles, shows that, in an economy with income inequality, a bubble attached to a durable, utility-yielding good can cause harm to low income borrowers even before the bubble bursts by reducing their lifetime acquisition of housing and consumption through higher prices and interest rates. This is in contrast to the standard bubble literature in which bubbles generally only cause harm when they collapse. In the second paper, Spatial Heterogeneity in Employment and Wage Growth After the Housing Crisis, I show evidence that the spatial differences (across MSAs and occupations) in the post-crisis period do not follow many of the general patterns that characterized the spatial differences of occupational wage and employment growth over much of the preceding two decades. This may be evidence of a new pattern of spatial economic differences at the MSA level after the housing crisis.
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  • In Copyright
  • Hendricks, Lutz
  • Tauchen, Helen
  • Chari, Anusha
  • Phan, Toan
  • Flabbi, Luca
  • Doctor of Philosophy
Degree granting institution
  • University of North Carolina at Chapel Hill Graduate School
Graduation year
  • 2017

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