Economic Consequences of the Great Recession: Evidence from the Panel Study of Income Dynamics

Abstract:

The paper uses micro-survey data from successive waves of the Panel Study on Income Dynamics to investigate the distribution of wealth and job losses during the 2007-09 recession for different segments of the population and the effect of the recession on the retirement decisions of older workers. Estimates of wealth losses are constructed for major socioeconomic groups and compared with those of the Survey of Consumer Finances. The panel dimension of the data is used to measure change in the labor force status of workers and to estimate the determinants of the decision to transition from participation in the labor force to retirement. The study concludes that retirement decisions are influenced both by variations in labor market conditions and by the value of household wealth but that labor market exerts a larger impact.