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The Rich Got Richer: The Effects of the Financial Crisis on Household Well-Being, 2007–2009

A Gedenkschrift to Randy Hodson: Working with Dignity

ISBN: 978-1-78560-727-1, eISBN: 978-1-78560-726-4

Publication date: 5 February 2016


The 2007–2009 financial crisis initially appeared to have destroyed a huge amount of wealth in the United States. Housing prices dropped about 21% across the country and as much as 50% in some places, and the stock market dropped by nearly 50% as well. This chapter examines how the financial crisis differentially affected households at different parts of the income and wealth distributions. Our results show that all households lost about the same percentage of their wealth in that period. But because households in the top 10% of the wealth distribution owned many different kinds of assets, their wealth soon recovered. The bottom 80% of the wealth distribution had more of their wealth tied up in housing. We show that financial distress, indexed by foreclosures, being behind in mortgage payments, and changes in house prices were particularly concentrated in households in the bottom 80% of the wealth distribution. These households lost a large part of their wealth and have not yet recovered. Households that were most deeply affected were those who entered the housing market late and took out subprime loans. African American and Hispanic households were particularly susceptible as they bought houses late in the price bubble often with subprime loans.



This chapter was originally presented at a Thematic Session on “Institutions and Inequality” at the 2014 Annual Meetings of the American Sociological Association, San Francisco, CA, August 16–19, 2014. The research reported here was supported by grants from the Institute for New Economic Thinking and the Institute for the Study of Labor and Employment at the University of California.


Fligstein, N. and Rucks-Ahidiana, Z. (2016), "The Rich Got Richer: The Effects of the Financial Crisis on Household Well-Being, 2007–2009", A Gedenkschrift to Randy Hodson: Working with Dignity (Research in the Sociology of Work, Vol. 28), Emerald Group Publishing Limited, Leeds, pp. 155-185.



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