Economic Insecurity and Social Stratification

Economic insecurity describes the risk of economic loss faced by workers and households as they encounter the unpredictable events of social life. Our review suggests a four-part framework for studying the distribution and trends in these economic risks. First, a focus on households rather than workers captures the microlevel risk pooling that can smooth income flows and stabilize economic well-being. Second, insecurity is related to income volatility and the risk of downward mobility into poverty. Third, adverse events such as unemployment, family dissolution, or poor health commonly trigger income losses. Fourth, the effects of adverse events are mitigated by insurance relationships provided by government programs, employer benefits, and the informal support of families. Empirical research in these areas reveals high levels of economic insecurity among low-income households and suggests an increase in economic insecurity with the growth in economic inequality in the United States.