charvi motwani

THE RELATIONSHIP OF UNEMPLOYMENT AND INCOME GROUPS: A DESCRIPTIVE ANALYSIS OF THE US ECONOMY

Started Aug. 22, 2025

Abstract or project description

Unemployment in the US economy has led to significant changes in the proportions of people across different income groups. Most notably, recessions have historically prevented many low-income earners from climbing the income ladder. Low-income earners appear to be the most vulnerable to downturns, reflecting their concentration in unstable and low-wage sectors, whereas high-income workers show minimal sensitivity to cyclical conditions. Changes in unemployment can alter employment prospects, reinforce existing inequalities, or reshape the composition of the labour force. This paper examines this connection within the context of the United States by leveraging cross-sectional data on individuals in three social classes. I examine whether unemployment rates affect, if at all, the evolution of households transitioning from various income groups over the 2009-2020 period. This analysis illustrates how labour market conditions intersect with income classification and broader economic structures.