Economic Insecurity in the Family Tree and the Racial Wealth Gap

55 Pages Posted: 13 Jun 2019 Last revised: 27 May 2021

See all articles by Jermaine Toney

Jermaine Toney

Cornell University; Rutgers University

Darrick Hamilton

The New School - Department of Economics

Date Written: May 27, 2021

Abstract

A growing body of research documents that middle income households are increasingly facing a higher prevalence of economic insecurity in relatives. We hypothesize that wealth accumulation will be greatly weakened for middle income households with proximity to a larger kin network of economic hardship. We focus on multiple generations and generational peers because they are members of the same family tree, yet they have grown up in different public policy regimes. Using panel data, we find that, compared to their white counterparts, third generation middle income black families are disproportionately exposed to relatives (siblings, cousins, parents, grandparents) that face poverty, unemployment, and wealth disparity. 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 in the third generation.

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

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

Suggested Citation

Toney, Jermaine and Toney, Jermaine and Hamilton, Darrick, Economic Insecurity in the Family Tree and the Racial Wealth Gap (May 27, 2021). Available at SSRN: https://ssrn.com/abstract= or http://dx.doi.org/10.2139/ssrn.3397222

Jermaine Toney (Contact Author)

Cornell University

Warren Hall
Ithaca, NY 14853
United States

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

Darrick Hamilton

The New School - Department of Economics ( email )

65 Fifth Avenue
New York, NY 10003
United States

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