Working Paper 2016-09: Michael Barr & Daniel Schaffa

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090716-WP-Nothing-left-to-lose

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Authors:

Michael Barr, Professor of Law, University of Michigan, Law School
Daniel Schaffa, PhD Candidate in Economics, University of Michigan, Law School


Abstract:

The Financial Crisis and ensuing Great Recession caused enormous hardship for households. Using original datasets, we examine the effects of the recession on a population many might think had nothing left to lose: low- and moderate-income households in the Detroit metropolitan area. We find that the Great Recession in fact imposed significant costs on these households, reducing employment and assets and increasing hardships in a wide variety of ways. Our findings suggest the need for more robust safety net policies and financial services that can help cushion the blows from sharp reductions in incomes and assets.