Economic Insecurity in the Family Tree and the Racial Wealth Gap

51 Pages Posted: 13 Jun 2019 Last revised: 28 Jan 2020

See all articles by Jermaine Toney

Jermaine Toney

Rutgers University ; Cornell University

Darrick Hamilton

The New School - Department of Economics

Date Written: January 28, 2020

Abstract

A growing body of research documents that middle income households are increasingly facing a higher prevalence of economic insecurity in relatives. Other research demonstrates that poverty and affluence in familial networks can act as contributors to wealth inequality. We use panel data and find that, compared to their white counterparts, third generation middle income black families (adult children) are more prone to have relatives (e.g. siblings, parents, and grandparents) that face poverty, unemployment, and wealth disparity. We also explore the cousin dimension of the extended family. We find that asset poverty is more pronounced throughout the life course of middle income black cousins, relative to their white peers. A decomposition of the wealth disparity reveals that economic insecurity in the family tree is one of the largest contributors to the black-white wealth gap among middle income earners.

Keywords: stratification economics, wealth, race, middle income, economic insecurity, Oaxaca-Blinder decomposition

JEL Classification: Z13, D31, D64, J15, I3

Suggested Citation

Toney, Jermaine and Hamilton, Darrick, Economic Insecurity in the Family Tree and the Racial Wealth Gap (January 28, 2020). Available at SSRN: https://ssrn.com/abstract= or http://dx.doi.org/10.2139/ssrn.3397222

Jermaine Toney (Contact Author)

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

Cornell University

Warren Hall
Ithaca, NY 14853
United States

Darrick Hamilton

The New School - Department of Economics ( email )

65 Fifth Avenue
New York, NY 10003
United States

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