Accounting for Racial Wealth Disparities in the United States

Posted: 12 Dec 2019

See all articles by Jeffrey P. Thompson

Jeffrey P. Thompson

New England Public Policy Institute, Federal Reserve Bank of Boston; Federal Reserve Board of Governors

Gustavo Suarez

Board of Governors of the Federal Reserve System

Date Written: 2019-12-01

Abstract

Using data from the Survey of Consumer Finances, this paper updates and extends previous research on the racial wealth gap in the United States. We explore several hypotheses that help explain differential wealth accumulation by racial groups, including the importance of receiving inheritances and other financial support from relatives and the conditions in local real estate markets. By exploring the disparities among white, black, and Hispanic families, we make new contributions to the literature. We find that observable factors account for the entire wealth gap between white and Hispanic families and most of the gap between white and black families. Differences in human capital, demographics, and family financial support each make substantial contributions to the wealth gaps we observe between white and nonwhite families. Yet a substantial portion of the wealth gap between white and black families remains unaccounted for after a detailed decomposition. This unexplained portion is greater at the top of the wealth distribution.

Keywords: racial wealth gap, inequality, inheritance, savings

JEL Classification: D31, D63

Suggested Citation

Thompson, Jeffrey P. and Suarez, Gustavo, Accounting for Racial Wealth Disparities in the United States (2019-12-01). FRB of Boston Working Paper No. 19-13. Available at SSRN: https://ssrn.com/abstract=3502647 or http://dx.doi.org/10.29412/res.wp.2019.13

Jeffrey P. Thompson (Contact Author)

New England Public Policy Institute, Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Federal Reserve Board of Governors ( email )

Washington, DC 20551
United States

HOME PAGE: http://https://www.federalreserve.gov/econres/jeffrey-p-thompson.htm

Gustavo Suarez

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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