Inherited Prospects: The Importance of Financial Transfers for White and Black College‐Educated Households’ Wealth Trajectories

Abstract

AbstractThe persistent racial wealth gap in the United States continues to grow, reaching an all‐time high in 2016. Throughout much of the discussion and analysis on the racial wealth gap, however, the assumption that higher education can at least narrow the gap has often been left unquestioned. While education is a factor in increasing incomes and wealth, recent research challenges the narrative that education is the key to reducing the racial wealth gap. Our findings provide further support for this growing literature. While black college graduates do have higher wealth than those without college degrees, the wealth gap with white college graduates remains vast, and the inheritances received by white college‐educated households provide a huge boost to wealth that is not available to their black counterparts. Further, we find that black college‐educated households are much more likely to provide financial support for their parents as well as their children, and that black households that do provide support across generations do so with much less net wealth than white households that do not.