Intergenerational Economic Mobility and the Racial Wealth Gap

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See all articles by Cassandra Robertson

Cassandra Robertson

New America Foundation

Jermaine Toney

Rutgers University ; Cornell University

Date Written: September 24, 2020

Abstract

A growing body of research documents the importance of wealth and the racial wealth gap in perpetuating inequality across generations. We add to this literature by examining the impact of wealth on child income by race, while also extending our analysis to three generations. Our two stage least squares regressions reveal that grandparental and parental wealth and the younger generation’s household income is strongly positively correlated. We further explore the relationship between income and wealth by decomposing the child’s income by race. We find that the disparity in income between black and white respondents is mainly attributable to differences in family background. In context, differences in family background are stronger than differences in educational attainment. When we examine different income percentiles, however, we find that the effect of grandparental and parental wealth endowment is much stronger at the top of the income distribution. These findings indicate that wealth is an important source of inequality, and that policymakers should seek to address the wealth gap explicitly to decrease inequality in outcomes.

Keywords: intergenerational mobility, race, wealth

JEL Classification: D31, J15, J62, Z13

Suggested Citation

Robertson, Cassandra and Toney, Jermaine, Intergenerational Economic Mobility and the Racial Wealth Gap (September 24, 2020). Available at SSRN: https://ssrn.com/abstract=

Cassandra Robertson

New America Foundation ( email )

Washington, DC USA 20009
United States

Jermaine Toney (Contact Author)

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

Cornell University

Warren Hall
Ithaca, NY 14853
United States

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