Economic Insecurity in the Family Tree and the Racial Wealth Gap

Abstract

Much research documents that middle-income households are facing high prevalence of economic insecurity associated with altruistic transfers to relatives in need. The focus of our examination is across and within generations of the same family tree that have grown up in different public policy regimes. Using panel data on U.S. families, we extend the breadth and depth of the work of Chiteji and Hamilton (2002). We find that, compared to their white counterparts, third-generation, middle-income black families are disproportionately exposed to relatives who face poverty, unemployment, and wealth disparity. Additionally, we find that economic insecurity in the family tree is one of the largest contributors to the black-white wealth gap.

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

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