Research Topics

The costs of the COVID-19 pandemic—in terms of both the health risks and economic burdens—will be borne disproportionately by the most vulnerable segments of US society. In this public policy brief, Luiza Nassif-Pires, Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila demonstrate that the COVID-19 crisis is likely to widen already-worrisome levels of income, racial, and gender inequality in the United States. Minority and low-income populations are more likely to develop severe infections that can lead to hospitalization and death due to COVID-19; they are also more likely to experience job losses and declines in their well-being.

The authors argue that our policy response to the COVID-19 crisis must target these unequally shared burdens—and that a failure to mitigate the regressive impact of the crisis will not only be unjust, it will prolong the pandemic and undermine any ensuing economic recovery efforts. As the authors note, we are in danger of falling victim to a vicious cycle: the pandemic and economic lockdown will worsen inequality; and these inequalities exacerbate the spread of the virus, not to mention further weaken the structure of the US economy.

The Levy Institute Measure of Economic Well-Being (LIMEW) was designed to provide a more comprehensive understanding of the changes affecting household living standards. Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila summarize their latest research on the trends in economic well-being for US households. They reveal historic stagnation in LIMEW growth over the 2000–13 period, as well as a major shift in the composition of well-being. The post-2000 period can be characterized as one of a growing dependence on the government to sustain living standards, with rising net government expenditures offsetting a sharp drop in base income.

This paper describes the quality of the statistical matching between the March 2014 supplement to the Current Population Survey (CPS) and the 2013 American Time Use Survey (ATUS) and Survey of Consumer Finances (SCF), which are used as the basis for the 2013 Levy Institute Measure of Economic Well-Being (LIMEW) estimates for the United States. In the first part of the paper, the alignment of the datasets is examined. In the second, various aspects of the match quality are described. The results indicate that the matches are of high quality, with some indication of bias in specific cases.

This paper documents the sources of data used in the construction of the estimates of the Levy Institute Measure of Economic Wellbeing (LIMEW) for the years 1959, 1972, 1982, 1989, 1992, 1995, 2000, 2001, 2004, 2007, 2010, and 2013. It also documents the methods used to combine the various sources of data into the synthetic dataset used to produce each year’s LIMEW estimates.

Post-2000 Trends in the United States

Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila update the Levy Institute Measure of Economic Well-Being (LIMEW) for US households for the period 2000–13. The LIMEW—which comprises base income, income from wealth, net government expenditures, and the value of household production—is aimed at achieving a more comprehensive understanding of trends in living standards. This policy brief analyzes developments during this period at all levels of the LIMEW distribution, with a particular focus on the significant role played by net government expenditures. The overall trend for 2000–13 was one of historic stagnation in the growth of economic well-being for US households, but an examination of the different components of the measure reveals significant shifts taking place behind this headline trend.
 
A companion document, the Supplemental Tables, features additional data referenced in the policy brief.

Details about the sources of data and methods used to construct the estimates in this policy brief are discussed in Levy Institute Working Paper No. 912.

Evidence from Measures of Economic Well-Being

The Great Recession had a tremendous impact on low-income Americans, in particular black and Latino Americans. The losses in terms of employment and earnings are matched only by the losses in terms of real wealth. In many ways, however, these losses are merely a continuation of trends that have been unfolding for more than two decades. We examine the changes in overall economic well-being and inequality as well as changes in racial economic inequality over the Great Recession, using the period from 1989 to 2007 for historical context. We find that while racial inequality increased from 1989 to 2010, during the Great Recession racial inequality in terms of the Levy Institute Measure of Economic Well-Being (LIMEW) decreased. We find that changes in base income, taxes, and income from nonhome wealth during the Great Recession produced declines in overall inequality, while only taxes reduced between-group racial inequality.

This paper describes the quality of the statistical matching between the March 2011 supplement to the Current Population Survey and the 2010 American Time Use Survey and Survey of Consumer Finances, which are used as the basis for the 2010 LIMEW estimates for the United States. In the first part of the paper, the alignment of the datasets is examined. In the second, various aspects of the match quality are described. The results indicate that the matches are of high quality, with some indication of bias in specific cases.

This report presents estimates of the Levy Institute Measure of Economic Well-Being (LIMEW) for a representative sample of Canadian households in 1999 and 2005. The results indicate that there was only modest growth in the average Canadian household’s total command over economic resources in the six years between 1999 and 2005. Although inequality in economic well-being increased slightly over the 1999–2005 period, the LIMEW was more equally distributed across Canadian households than more common income measures (such as after-tax income) in both 1999 and 2005. The median household’s economic well-being was lower in Canada than in the United States in both years.

We construct estimates of the Levy Institute Measure of Economic Well-Being for France for the years 1989 and 2000. We also estimate the standard measure of disposable cash income (DI) from the same data sources. We analyze overall trends in the level and distribution of household well-being using both measures for France as a whole and for subgroups of the French population. The average French household experienced a slower rate of growth in LIMEW than DI over the period. A substantial portion of the growth in well-being for the middle quintile was a result of increases in net government expenditures and income from wealth. We also found that the well-being of families headed by single females relative to married couples deteriorated much more, while the well-being of households headed by the elderly relative to households headed by the nonelderly improved much more than indicated by the standard measure of disposable income. The conventional measure indicates that a steep decline in economic inequality took place between 1989 and 2000, while our measure indicates no such change. We argue that these outcomes can be traced to the difference in the treatment of the role of wealth in shaping economic inequality. Our measure also indicates that, on balance, government expenditures and taxes did not have an inequality-reducing effect in France for both years. This is, again, contrary to conventional wisdom.

The quality of match for each of four statistical matches used in the LIMEW estimates for France for 1989 and 2000 is described. The first match combines the 1992 Enquête sur les Actifs Financiers with the 1989–90 Enquête Budget de Famille (BDF). The second match combines the 1998 General Social Survey (EDT) with the 1989–90 BDF. The third match combines the 2003–04 Enquête Patrimoine with the 2000–01 BDF. The fourth match combines the 1999 EDT with the 2000 BDF. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. In each case, the matches are of high quality, given the nature of the source datasets.

We construct estimates of the Levy Institute Measure of Economic Well-Being for Great Britain for the years 1995 and 2005. We also produce estimates of the official British measures HBAI (from the Department for Work and Pensions annual report titled “Households below Average Income”) and ROI (from the Office of National Statistics Redistribution of Income analysis). We analyze overall trends in the level and distribution of household well-being using all three measures for Great Britain as a whole and for subgroups of the British population. Gains in household economic well-being between 1995 and 2005 vary by the measure used, from 23 percent (HBAI) to 32 percent (LIMEW) and 35 percent (ROI). LIMEW shows that much of the middle class’s gain in well-being was as a result of increases in government expenditures. LIMEW also marks a greater increase in economic well-being among elderly households due to the increase in their net worth. The redistributive effect of net government expenditures decreased notably between 1995 and 2005 according to the official measures, primarily due to the change in the distributive impact of government expenditures.

The quality of match of four statistical matches used in the LIMEW estimates for Great Britain for 1995 and 2005 is described. The first match combines the fifth (1995) wave of the British Household Panel Survey (BHPS) with the 1995–96 Family Resources Survey (FRS). The second match combines the 1995 time-use module of the Office of Population Censuses and Surveys Omnibus Survey with the 1995–96 FRS. The third match combines the 15th wave (2005) of the BHPS with the 2005 FRS. The fourth match combines the 2000 United Kingdom Time Use Survey with the 2005 FRS. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. In each case, the matches are of high quality, given the nature of the source datasets.

The quality of match of four statistical matches used in the LIMEW estimates for the United States for 1992 and 2007 is described. The first match combines the 1992 Survey of Consumer Finances (SCF) with the 1993 March Supplement to the Current Population Survey, or Annual Demographic Supplement (ADS). The second match combines the 1985 American Use of Time Project survey (AUTP) with the 1993 ADS. The third match combines the 2007 SCF with the 2008 March Supplement to the CPS, now called the Annual Social and Economics Supplement (ASEC). The fourth match combines the 2007 American Time Use Survey with the 2008 ASEC. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. Also in each case, the matches are of high quality, given the nature of the source datasets.

The quality of match of four statistical matches used in the LIMEW estimates for Canada for 1999 and 2005 is described. The first match combines the 1999 Survey of Financial Security (SFS) with the 1999 Survey of Labour and Income Dynamics (SLID). The second match combines the 1998 General Social Survey (GSS) with the 1999 SLID. The third match combines the 2005 SFS with the 2005 SLID. The fourth match combines the 2005 GSS with the 2005 SLID. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. Also in each case, the matches are of high quality, given the nature of the source datasets.