Judgments of Responsibility for Inequality: A Framework and Review.

We present evidence on the Black–White Racial Wealth Gap in South Africa and compare it to the well-known patterns of the same gap in the United States. We find that the patterns in the overall racial wealth gap are similar between the two countries. In South Africa, the typical Black household owns 5 per cent of the wealth held by the typical White household. In the US, the typical Black household owns 6 per cent of the wealth held by the typical White household. In both countries, a racial wealth gap exists at different levels of education and income. The fact that the racial wealth gap in the US is similar to that of a country that recently emerged from apartheid is a sobering indictment. Conversely, the US presents a grim outlook of the future course of the racial wealth gap in South Africa, especially in the absence of economic redress. The similarities in the evidence between the two countries points to the potential utility of using the Identity Group Stratification framework for understanding racial wealth dynamics in South Africa, an approach that is absent in the literature.

Can income differences explain the racial wealth gap? A quantitative analysis

The US racial wealth gap is substantial and growing, stemming from a history of structural racism and the intergenerational transmission of wealth. This article investigates the role of corporate equity and mutual fund ownership on the racial wealth gap over time. 92.1 percent of US corporate equity and mutual fund value is owned by white households; Black households own 1.5 percent while Hispanic households own 1.9 percent. I use the Federal Reserve's Distributional Financial Accounts to determine the changing impact of the corporate equity gap on the racial wealth gap, and to measure how shareholder payments—dividends and stock buybacks—are divided by race and ethnicity. I find that total shareholder payments made to white households during that time frame totaled $13 trillion, while $181 billion went to Black households and $212 billion to Hispanic households. I then find that the proportion of the gap in corporate equity and mutual fund ownership to the overall racial wealth gap has grown over the past three decades, from 10 percent to 23 percent. This analysis contributes to policy discussions about ending shareholder primacy and wealth inequities that are a legacy of the US's history of slavery, racism, and xenophobia.

The emerging subfield of stratification economics is a response to the orthodoxy's resistance to recognizing the role of racial and ethnic disparities and its penchant for adopting cultural explanations for intergroup differences. With this view, the literature on the racial wealth gap and its particular embrace of the Life Cycle Hypothesis (LCH) offers a clear example of this critique at work. Not only is the LCH incapable of explaining why the racial wealth gap is so much larger than the income gap, but its limitations restrict the range of explanations explored. As an alternative, this paper introduces the Wealth Privilege (WP) model. Unlike the LCH, the WP model can incorporate the effects of contemporary racism as well as the systemic sources that are a legacy of several centuries of racialized policies. Using evidence from the 2013 Survey of Consumer Finances (SCF), this article offers empirical corroboration as well. Since the SCF queries households on their attitudes toward saving and investment, this article investigates the extent that cultural differences explain the wealth gap. To limit the problem of skewness, which is inherent in wealth studies, the analysis uses an inverse hyperbolic-sine transformation of household net worth. The OLS regression results show scant support for key features of the LCH while demonstrating the importance of asset ownership and family support, both crucial facets of the WP model. Two different decomposition methods, Blinder - Oaxaca and DiNardo - Fortin - Lemieux, corroborate these conclusions. As wealth is easily transferable across generations, the evidence supports the contention that household wealth serves as a source of economic stratification as it functions to preserve and even widen the racial wealth gap.

This article examines the mismatch between the political discourse around individual agency, education, and financial literacy, and the actual racial wealth gap. The authors argue that the racial wealth gap is rooted in socioeconomic and political structure barriers rather than a disdain for or underachievement in education or financial literacy on the part of Black Americans, as might be suggested by the conventional wisdom. Also, the article presents a stratification economic lens as an alternative to the conventional wisdom to better understand why the racial wealth gap persists.

The 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.

This paper develops an overlapping generations model that isolates the impact of the US racial wealth gap in 1962 on the long-run dynamics of wealth. The model predicts that one component of the initial gap, firm ownership, coupled with the intergenerational transfer of that ownership results in a permanent wealth gap independent of other dimensions of inequality. This implies that even if all discrimination against Black Americans had ceased upon the end of Jim Crow, the wealth gap would have persisted without a reparations policy addressing the fact that the initial firm ownership gap arose in the first place.

Inheritances make up a substantial share of national wealth, but are often overlooked in discussions of retirement security. Racial gaps in inheritances are likely to exacerbate racial disparities in wealth. One reason that Black and Hispanic decedents are less likely to pass down meaningful estates is that they are far less likely to have a will than non-Hispanic Whites. This paper documents racial gaps in receiving an inheritance, in the likelihood of having a will, and in the expectation of leaving significant bequests. The analysis then looks at the relationship between bequest expectations and realized bequests to see whether expectations are a good predictor of real outcomes. The results show that Black and Hispanic decedents and those who die without a will are less likely to achieve their bequest expectations. This paper is the first of a three-part series. The second part will be a survey to see if a plausible intervention might increase the adoption of wills, whether writing of a will increases intended bequests, and, in conjunction with the estimates of this paper, whether wills would likely increase realized bequests. The third part of the project will examine the impact of will incentives on racial wealth gaps when compounded across multiple generations.

What drives the dynamics of the racial wealth gap? We answer this question using a dynamic stochastic general equilibrium heterogeneous-agents model. Our calibrated model endogenously produces a racial wealth gap matching that observed in recent decades along with key features of the current cross-sectional distribution of wealth, earnings, intergenerational transfers, and race. Our model predicts that equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap. One-time wealth transfers have only transitory effects unless they address the racial earnings gap, and return gaps only matter when earnings inequality is reduced.

Even in the context of high levels of overall wealth inequality, the racial wealth gap in the United States is striking. Black Americans own between 5–9 cents for every dollar of White wealth. Because socioeconomic factors are both fundamental determinants of health and strongly patterned by race, the racial stratification of wealth in the United States is a key mechanism linking structural and institutional racism to population health inequality. This chapter reviews and synthesizes previous research on the associations between wealth and individual and population health, contextualizing these findings in an era of rising levels of wealth inequality in the United States. Given documented associations between wealth and health and staggering levels of racial wealth inequality, the chapter makes the case that the racial wealth gap is a critical driver of population-level racial health inequities across the life course. In addition to reviewing previous research, the author also uses new estimates from the Panel Study of Income Dynamics (PSID) and the Health and Retirement Study (HRS) to make claims. The chapter closes with a discussion of how policies and interventions to reduce wealth inequality and to shrink the racial wealth gap are essential health policies and describes future directions for research on wealth and health. Throughout the chapter, the author pays particular attention to the relevance of life-course theories and concepts in research on wealth and heath and highlights the critical role of aging and life-course scholars in shaping policy debates.

Researchers began to explore the wealth holdings of households by race in the mid-1980s, when data became available for the first time. The magnitude and implications of these early findings were shocking: most found that, on average, black households owned only a dime for each dollar of wealth owned by white households (Lui, Robles, and Leondar- Wright 2006). This difference was much larger than the prevailing income gap of 60 cents-to-the-dollar. More alarmingly, the racial wealth gap has increased further since it was first analyzed. Our analysis reveals an increase of $151,000 in the absolute racial wealth gap between 1984 and 2009. This chapter empirically examines the main reasons behind the rise in the racial wealth gap over the past 25 years, deepening the analytic and policy understanding and narrative required to effectively disrupt and reverse this trend.KeywordsQuantile RegressionGreat RecessionBlack Political EconomyAfrican American FamilyHome EquityThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Research has repeatedly argued that increasing the rate at which Black people start businesses could reduce the racial wealth gap between Black and white families, but increasing the rate of Black entrepreneurship may actually exacerbate the racial wealth gap, due to the economic cost associated with business closure. Using longitudinal data from the Panel Study of Income Dynamics (PSID), we find that, as past work suggests, Black-owned businesses are less likely to remain open 4 years later, compared to white-owned businesses, and that, due to this disparity, Black business owners are more likely to experience downward economic mobility and less likely to experience upward mobility, compared to their white counterparts. These results suggest that improving the rate at which Black entrepreneurs succeed, rather than increasing the rate at which Black people become entrepreneurs, should be the target of efforts to leverage business ownership to reduce the racial wealth gap.

Over the past twenty years, the federal government has spent more than $8 trillion through the tax code to help households save, invest, and build wealth. However, an overwhelming majority of this tax spending has gone to the wealthiest Americans who hardly need the support to build more wealth. Since 1994, the federal government's massive spending on asset building has more than doubled, and there are no signs of it slowing down. This upside-down tax system perpetuates the widespread wealth inequality we are seeing in this country, and it exacerbates the racial wealth gap that is holding back so many Asian Americans and Pacific Islanders (AAPIs) and other households of color. This paper will (1) illustrate how the tax code plays a role in widening the racial wealth gap for AAPIs and other communities of color, (2) explain how current asset-building tax programs are missing an opportunity to boost the wealth of low-income AAPIs and other communities of color, and (3) propose legislative action to...

Racial economic inequality is a foundational feature of the United States, yet many Americans appear oblivious to it. In the present work we consider the psychology underlying this collective willful ignorance. Drawing on prior research and new evidence from a nationally representative sample of adults (N = 1,008), we offer compelling evidence that Americans vastly underestimate racial economic inequality, especially the racial wealth gap. In particular, respondents thought that the Black–White wealth gap was smaller, by around 40 percentage points in 1963 and around 80 percentage points in 2016, than its actual size. We then consider the motivational, cognitive, and structural factors that are likely to contribute to these misperceptions and suggest directions for future research to test these ideas. Importantly, we highlight the implications of our collective ignorance of racial economic inequality and the challenge of creating greater accuracy in perceptions of these racial economic disparities, as well as outline the steps policymakers might take to create messages on this topic that effectively promote equity-enhancing policies. We close with an appeal to psychological science to at least consider, if not center, the racial patterning of these profound economic gaps.

Using newly available data from the Survey of Consumer Finances, this paper updates and extends the literature exploring the racial wealth gap. We examine several hypotheses proposed by previous researchers, including the importance of inherited wealth and other family support and that of trends in local real estate markets, and also extend the literature by exploring the gap across the distribution of wealth and simultaneously considering white, African American and Hispanic households. The findings indicate that observable factors account for all of wealth gap between white and Hispanic households and most of the gap between white and black families – more than in most previous research – but a substantial unexplained portion remains. Wealth differences between black and white families are completely due to different asset holdings, while wealth differences between black and Hispanic families are mostly a result of different debt holdings. Home ownership and educational attainment are the single largest observable factors that account for the racial wealth gaps, with income and financial assistance from family members playing important roles as well. The unexplained portion of the wealth gap between white and non-white families is greater at the top of the wealth distribution.