Life-Cycle Inequality: Blacks and Whites Differentials in Life Expectancy, Savings, Income, and Consumption

82 Pages Posted: 21 Sep 2020

See all articles by Giacomo De Giorgi

Giacomo De Giorgi

University College London; NBER; Federal Reserve Banks - Federal Reserve Bank of New York

Luca Gambetti

University of Turin

Costanza Naguib

University of St. Gallen; University of Lugano; University of Bern - Faculty of Economics and Social Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: August 7, 2020

Abstract

Life expectancy for Blacks is about 8 year shorter than for Whites. A shorter life expectancy, in line with the theoretical prediction of a simple model, determines a much lower amount of savings and wealth accumulation and therefore a lower degree of insurance. This, in turn, contributes to persistent racial differentials in life-cycle consumption. Starting from the same position in the consumption distribution Blacks end up in a lower percentile than Whites after a few decades. This is particularly marked for those Blacks who start at the top of the consumption distribution, where Whites are much more persistent. We document these facts using 40 years of PSID data (1981-2017).

Keywords: Consumption, Income, Earnings Persistence, Quintile Transitions

JEL Classification: E21, E63, D12, C3

Suggested Citation

De Giorgi, Giacomo and Gambetti, Luca and Naguib, Costanza, Life-Cycle Inequality: Blacks and Whites Differentials in Life Expectancy, Savings, Income, and Consumption (August 7, 2020). Available at SSRN: https://ssrn.com/abstract=3669023 or http://dx.doi.org/10.2139/ssrn.3669023

Giacomo De Giorgi

University College London ( email )

Gower Street
London
United Kingdom

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Luca Gambetti

University of Turin ( email )

Via Po 53
Torino, Turin - Piedmont 10100
Italy

Costanza Naguib (Contact Author)

University of St. Gallen ( email )

Switzerland

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, TN Ticino 6900
Switzerland

University of Bern - Faculty of Economics and Social Sciences ( email )

United States

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