Social and Economic Effects of the Great

Recession
This RFP is currently closed. The original RFP described below provides the
overarching rationale for the 30 project awards made in 2011 through early 2012.

After suffering through the longest and deepest economic downturn since the 1930s, the U.S. is
now two years past the official end of the Great Recession. Since ending in June 2009, GDP and
the stock market have improved, but the social and economic effects of the recession continue to
reverberate through the U.S. economy. Labor market data show that more than14 million
Americans remain unemployed with an unprecedented 6.3 million out of work longer than six
months. Another 11.3 million are working less than they would like either working part-time
or wanting a job but have stopped looking. Job growth is positive but sluggish, and at recent
rates of growth, it could take a decade or longer to reestablish the prerecession unemployment
rate of 5%. The record number of home foreclosures experienced during the recession and its
immediate aftermath has subsided somewhat, but the housing market remains stagnant and
home prices hit new lows in the first quarter of 2011. The economic disruption has also
produced significant gaps between revenues and expenditures in state and local budgets, and
stock market losses exposed underfunded pension plans nationwide. The expected long-term
effects of this recession mean that governments at all levels will have to implement some mix of
discretionary cuts and higher taxes in order to achieve balanced budgets. In the two-year
recovery, public sector job losses have canceled out 40% of the private sector job gains, and
government workforces are likely to be under pressure for some time to come.

Given the prospects for a prolonged period of sluggish growth, high unemployment, depressed
housing prices, and severe fiscal constraints on government, the Russell Sage Foundation has
decided to support a battery of studies of the social and economic effects of the Great Recession.
Prolonged economic stagnation is likely to transform American institutions and severely erode
the life chances of many Americans. We are interested in research that examines these effects
across a broad swath of social and economic life, including, but not limited to, effects on
individual aspirations and optimism about the future; health and mental health; family
formation and stability, and the wellbeing of children; the viability of communities, particularly
those hit hardest by the foreclosure crisis; the performance of the education system at all levels;
the incidence of crime and the performance of the criminal justice system; immigration to the
U.S. and internal migration within the U.S.; the structure and performance of the American
labor market; the distribution of income and wealth and the incidence and depth of poverty; the
fiscal condition of the states and the implications of state budget crises; the financial condition
of American households and their decisions about consumption and savings; the performance of
the social safety net, particularly where benefits are contingent on employment; retirement
behavior and the adequacy of pension provisions; and the reaction of the American political
system, including swings in political alignments and forms of organization and participation.
The Appendix illustrates the kinds of questions in each of these social and economic domains
that are of concern to the Foundation. These are provided as examples of the sorts of issues the
Foundation is interested in addressing, but they are not intended to be either exhaustive or
exclusive.

In general the Foundation will consider support for several different types of projects:

1. Long-term projects that track and analyze the effects of the Great Recession over the
next three to five years. So, for example, the implications of the fiscal crisis in state
budgets may take some time to unfold. A comparative analysis of the choices states make
in balancing their budgets and the consequences of those choices may only become
meaningful several years into the current crisis. In another area, the effects of the
recession on families may only show up after families exhaust their resources for coping
with insecure employment or housing, and, if there are scarring effects on children, these
may be even slower to emerge.
2. Analytic studies examining effects of the Great Recession that cut across social and
economic domains. For example, an analysis of the way the recession impacts
disadvantaged youth might examine the possible link between local variation in
unemployment, school dropout, and criminal involvement. Or, analysis of labor market
participation among older Americans might consider the possible effects of changes in
pension wealth and the early uptake of Social Security benefits after job loss.
3. Innovative studies of the deeper, more subtle effects of the Great Recession on
psychological attitudes and social norms. For example, will the unusually high rates of
long-term unemployment characteristic of this recession and its aftermath lead to long-
term scarring effects and diminished aspirations? Will high rates of delinquent debt and
under water mortgages undermine norms about default and weaken financial
responsibility more generally? Or will the need to deleverage lead American households
to take a more conservative, cautious approach to household financial decisions. Studies
of these subjective issues may require the creative combination of qualitative and
quantitative methods to assess the subjective impact of changed financial circumstances.
4. Studies of the ways in which American institutions have been impacted by the Great
Recession, particularly in response to the fiscal and other pressures that have emerged
during the crisis and its aftermath. For example, universities have experienced severe
budget constraints imposed either by state budget cuts or private endowment losses at a
time when student needs for financial support are increasing. How have universities
responded to these pressures and with what consequence? Studies of institutional
adaptation of questions like these may rely on case studies of particular institutions or
the collection of administrative data across institutions to support generalizations about
institutional change.
In general, we are seeking innovative research projects that go beyond the simple description of
trends to examine unanticipated implications of the Great Recession. Such research may build
on comparisons of current conditions with what is known about the outcomes of prior
recessions to develop testable predictions about the likely consequences of the current slump.
We anticipate that many funded projects will use publicly available data sets, but we recognize
that meaningful tests of predictions about the effects of the Great Recession may well involve
mounting new waves of previously conducted surveys or the replication of other data sources
that provide pre-recession baselines. In such cases, we are willing to consider proposals for
limited data acquisition or collection. In all other cases, Foundation support will be limited to
research assistance, data analysis costs, and modest release time for analyzing and writing up
results. The Foundation is supporting a website that will become a clearinghouse for
information about the effects of the Great Recession and we anticipate that all working papers
and research briefs from projects supported under this initiative will be published (non-
exclusively) on the RSF website.

We are now beginning the second funding round for this initiative. After the first round, we
funded 10 projects across 9 of the domains listed in the appendix (a description of projects
funded in the first round can be found here). In this round, we will consider projects across all
domains, but we are especially interested in projects that fall within the following topic areas
that were not covered in the first round: changes in attitudes and norms brought on by the
economic slump, effects on communities particularly hard hit by foreclosures and/or
unemployment, changes in the incidence of crime that can be traced to recessionary conditions,
and effects of the fiscal crisis in state and local budgets, and changes in immigration and
internal migration linked to the recession and its aftermath. We also continue to be interested in
research on the performance of the U.S. labor market during this prolonged period of high
unemployment. Although we are not imposing limits on the size of the funding requests that will
be entertained, cost/benefit considerations will enter prominently into the evaluation of all
projects. For your reference, it may be of interest that awards approved in the first round
generally ranged between $75,000 and $250,000 for project periods spanning one to four years.

We invite all researchers interested in participating in this initiative to send us a letter of inquiry
of no more than three single-spaced pages describing the research project on the effects of the
Great Recession that you would propose to undertake. Your letter should describe and motivate
the hypothesis about the effects of the Great Recession that you are interested in studying; it
should spell out the empirical work required and the data sources to be used; it should sketch
your analytic approach; and it should explain and estimate the research costs involved.

An Advisory Committee established by the Foundation will review all letters of inquiry and full
proposals will be invited for those projects that appear most promising.

After several funding rounds in 2011 and early 2012, this RFP is now closed. Please address any
questions to programs@rsage.org.
APPENDIX

Communities
Poverty in the suburbs has increased by more than a third over the past decade. Although
poverty rates remain higher in the inner city, the gap is narrowing. Suburban areas largely
escaped the effects of earlier downturns, but not this time.

What happens in communities where high-unemployment rates and high-foreclosure

rates coincide? What is the impact on housing stock, home values, fiscal capacity, out-
migration, and more elusive matters like social capital and social efficacy?
How has the recession influenced the geographic distribution and concentration of the
poor?
If residential mobility is down, how will this affect the social infrastructure of
communities?

Consumption/Savings
The personal savings rate has increased from less than 3% of disposable personal income in
2005-2007 to almost 6% of disposable income in 2010. In addition, for the first time since 1940,
the total amount of consumer credit outstanding has declined with the current recession.

What has been the net effect of the recession on personal finances, consumption, and
consumer confidence?
How did households reduce consumption? Are these sustainable strategies if incomes do
not recover?
Have individuals reduced or increased their contributions to savings and retirement?
Have households borrowed against existing investment and retirement accounts to stay
afloat? What are the consequences?
Do these trends signal a fundamental change in consumer and financial behavior?

Crime and the Criminal Justice System

During most of the last decade, crime rates nationally have been stable or declining slightly.
Some evidence suggests that those trends may be in jeopardy. Although the overall crime rate in
New York City for example, remains stable, the most recent data shows that the murder rate is
up by 15% over the prior year.

Will crime rates that have been decreasing or stable over the longer-term continue their
current trajectory or shift direction?
How effectively will police, courts, and corrections agencies be able to function given
more limited resources and increased demands?
 Will states use early release mechanisms to reduce prison populations and costs? Are
probation and parole caseloads likely to change and, if so, will this impact technical
violation rates?
If greater numbers of incarcerated individuals are released into economically distressed
communities from whence they came, what will be the impact on those individuals, their
families, and those communities?

Family
Effects on families are likely to be broad and profound. One of the most visible aspects of the
recession, job losses and unemployment are known to be associated with increased stress,
poorer health outcomes, declines in childrens academic achievement and educational
attainment, delays in age of marriage, and changes in household structure. Recent evidence
already indicates a 12% increase in the number of multigenerational households between 2006
and 2010.

What have the consequences been for marriage, divorce, cohabitation, fertility, and
household structure? Have some groups been more affected than others?
What have the consequences been for the household division of labor? Are fathers more
likely to be laid off than mothers? Do mothers work more when fathers work less?
How have young adult children been affected? With weaker job prospects, are more
living at home longer? Do they require greater financial and social support?
What have the consequences been for family function, including parents relationship
quality, parent-child relationships, and parenting quality?
How have childrens immediate outcomes, such as academic performance, behavior, and
delinquency, and their ultimate life chances, been affected?

Fiscal Crisis in State Budgets

The decline in revenue and increased demand for state services has resulted in states facing total
budget gaps of nearly $300 billion over the 2009-2012 period. Federal assistance through the
American Recovery and Reinvestment Act (ARRA) provided temporary relief but is now
terminated.

With nearly all states experiencing significant budget gaps, what policy changes have the
states enacted to address these gaps? What are the distributional impacts of state policy
changes?
With health and prisons the fastest growing part of state budgets over the past several
decades, how will states allocate the more limited resources associated with declining tax
revenues? Which states are more likely to implement tax increases vs. spending cuts and
with what impact on the state economy?
 The financial crisis has exposed the underfunding of pension systems nationwide. What
actions are states likely to take regarding promised benefits? How will it impact state
budgets?

Education
Thirty-five states have made education budget cuts in 2010 totaling nearly $8 billion in K-12 and
higher education; 31 states are proposing additional cuts in education in 2011.

What are the effects of budget cuts on the provision of public K-12 education? How have
graduation rates, class size, school closings, and teacher employment and turnover been
affected?
How has the quality of public higher education been affected at all levels from the
flagship four-year universities to community colleges?
Has the demand for a college education increased? Has it shifted by family
socioeconomic status or student demographics?
Have the net costs of acquiring a college education changed, and what are the
consequences for students of different socioeconomic backgrounds?

Foreclosures in the U.S.

Between 2006 and 2009, the number of home foreclosure filings increased from approximately
1.2 million annually to almost 4 million and have been disproportionately concentrated in black
and Hispanic neighborhoods. Potential home losses on this scale and concentration portend
greater community disruption and the potential for decline. Home ownership is also one of the
primary vehicles of wealth accumulation in the U.S. implying greater financial instability for
millions of Americans in both the present and longer term.

Which individuals and communities have been most likely to experience foreclosures?
What have been the consequences for both the individuals who have lost homes and the
communities that have experienced the highest rates of home losses?
Have the wealth losses associated with home foreclosures been differentially distributed
among specific groups?
How do households adjust behavior in response to declines in housing wealth?
Have housing policies designed to reduce home foreclosures been effective in doing so?
Who has been helped most?

Health and Mental Health

Job loss is a significant source of stress and has been shown to be associated with health
outcomes such as increased risk of heart attack and stroke; increased chance of diabetes,
arthritis, and psychiatric problems; greater depression, anxiety, and loss of sleep.
 What kinds of changes in health and mental health can be attributed to the economic
insecurity brought on by the Great Recession and its aftermath?
Have there been psychological changes in the population at large, and particularly the
young, in their aspiration levels, their optimism about the future, and their expectations
for achievement and upward mobility?
What are the health consequences in communities that are particularly hard hit by the
recession?
What are the likely consequences of cutbacks to health and mental health services?

Immigration and Migration

The inflow of economic migrants to the U.S. across the Mexican border has declined sharply as
the recession has taken hold, and internal patterns of migration may have shifted as traditional
employment opportunities for migrants have declined.

How are patterns of immigration and internal migration changing? What are the
consequences for immigrant communities?
How has the collapse of the construction industry affected internal migration? Are
changes in other industries related to changes in internal migration?
How are Americans views of immigrants, immigration, and the immigration debate
being affected by prolonged economic hardship and insecurity?
Are patterns of return migration being affected by the recessions lingering effects?

Income, Poverty, and Inequality

The official poverty rate increased from 13.2 % in 2008 to 14.3 % in 2009, with nearly 4 million
more people in poverty than in the prior year. Nearly every recession since 1969 has shown
significant increases in poverty rates, with the effects disproportionately concentrated among
children.

How has the recession affected the income and wealth of individuals at different points
in the income distribution? Which individuals and groups have seen the greatest change?
If different vehicles for wealth accumulation have been disproportionately impacted,
which assets (for example, retirement assets, housing, and investments) have been most
vulnerable to the downturn?
Have poverty rates changed and who has been most likely to fall into or remain in
poverty?
Has the recession affected the increased concentration of earnings at the top of the
income distribution?
Has the slow rise in economic inequality that characterized the U.S. since the 1970s been
exacerbated, moderated, or unchanged?
Labor Market
A period of prolonged high unemployment, marked by historic rates of long-term
unemployment is likely to have profound effects on the functioning of the U.S. labor market and
the lives of the unemployed, their families and communities, and the institutions that support
them.

How severe are the scarring effects of long-term unemployment? Which groups are
primarily affected? What policies and programs are effective in re-employing the long-
term unemployed?
Does the magnitude of the recession signal a major restructuring of the U.S. labor
market? To what extent are the causes of prolonged unemployment due to structural
mismatches between the demand and supply of skill as opposed to deficient demand?
What geographic regions and communities experienced the highest concentrations of
unemployment and why? What are their prospects for recovery?

Political Responses
American politics during the Great Recession have been especially volatile, marked by rising
populist anger against incumbents held responsible for the crisis, large electoral swings, and
new forms of political organization and funding.

How are political orientations, party identification, and political participation changing
in the aftermath of the recession?
How do Americans perceive the role of business and government in causing the crisis
and recovering from it?
What are the electoral consequences of widespread economic insecurity?

Retirement
Pension shortfalls in states and municipalities are estimated at close to $4 trillion, and even
after the stock market recovery, private pension account balances are down about $800 billion
from pre-recession levels.

What is the impact of pension losses on the future retirement income of retirees? Which
groups have been particularly hard hit?
How are retirement decisions being affected by pension losses and job losses among
older Americans? Is the distribution of retirement age by income or education
changing?

Social Safety Net

Currently, about 46% of the 14.6 million unemployed persons have been jobless for 27 weeks or
longer and about 31% were unemployed for 52 weeks or longer.
 How well has the U.S. social safety net functioned during the recession and the
subsequent period of prolonged high unemployment? How has the demand for
emergency and safety net services changed as a result of the recession? How effectively
have the different programs (e.g., TANF, SSI, SNAP) responded to rising need?
If gaps exist, have community nonprofits been able to fill those gaps? Or has the
recessions impact on those nonprofits limited their ability to respond to increased need?
What happens to welfare recipients whose time-limited benefits expire in a high-
unemployment economy?
What was the impact of the American Recovery and Reinvestment Act? What happens to
state welfare programs now that ARRA has expired?