Abstract
Vast racial inequalities continue to prevail across the United States and are closely linked to economic resources. One particularly prominent argument contends that childhood wealth accounts for black–white (BW) disadvantages in life chances. This article analyzes how much childhood wealth and childhood income mediate BW disadvantages in adult life chances with Panel Study of Income Dynamics and Cross-National Equivalent File data on children from the 1980s and 1990s who were 30+ years old in 2015. Compared with previous research, we exploit longer panel data, more comprehensively assess adult life chances with 18 outcomes, and measure income and wealth more rigorously. We find large BW disadvantages in most outcomes. Childhood wealth and income mediate a substantial share of most BW disadvantages, although there are several significant BW disadvantages even after adjusting for childhood wealth and income. The evidence mostly contradicts the prominent claim that childhood wealth is more important than childhood income. Indeed, the analyses mostly show that childhood income explains more of BW disadvantages and has larger standardized coefficients than childhood wealth. We also show how limitations in prior wealth research explain why our conclusions differ. Replication with the National Longitudinal Survey of Youth and a variety of robustness checks support these conclusions.
Highlights
Vast racial inequalities continue to prevail across the United States and are closely linked to economic resources
Childhood wealth and income explain a substantial share of most BW disadvantages, there are several significant and large direct BW disadvantages even after adjusting for childhood wealth and income
We advance beyond prior research by exploiting longer panel data, more comprehensively assessing adult life chances with 18 outcomes, and measuring income and wealth more rigorously
Summary
Vast racial inequalities continue to prevail across the United States and are closely linked to economic resources. We use the same PSID data set as studies claiming larger effects of childhood wealth versus income (e.g., Conley 1999), our improvements in measurement of income and wealth are a clear advantage. We model outcomes as a function of being black while adjusting for the two key mediators, childhood wealth and income.
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