Intergenerational Economic Mobility and the Racial Wealth Gap

American Economic Review Papers and Proceedings (2021). https://www.aeaweb.org/articles?id=10.1257/pandp.20211113

12 Pages Posted: 13 Nov 2020 Last revised: 19 Oct 2023

See all articles by Jermaine Toney

Jermaine Toney

Rutgers University ; Cornell University

Cassandra Robertson

New America Foundation

Date Written: January 9, 2021

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. Our two stage least squares regressions reveal that grandparental and parental wealth have an important effect on the younger generation’s stock (first stage results), which in turn affects the younger generation’s household income (second stage results). We further explore the relationship between income and wealth by decomposing the child’s income by race. We find that the intergroup disparity in income is mainly attributable to differences in family background. These findings indicate that wealth is an important source of income inequality.

Keywords: inter-generational mobility, race, wealth

JEL Classification: D31, J15, J62, Z13

Suggested Citation

Toney, Jermaine and Robertson, Cassandra, Intergenerational Economic Mobility and the Racial Wealth Gap (January 9, 2021). American Economic Review Papers and Proceedings (2021). https://www.aeaweb.org/articles?id=10.1257/pandp.20211113, Available at SSRN: https://ssrn.com/abstract=3698814 or http://dx.doi.org/10.2139/ssrn.3698814

Jermaine Toney (Contact Author)

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

Cornell University

Warren Hall
Ithaca, NY 14853
United States

Cassandra Robertson

New America Foundation ( email )

Washington, DC USA 20009
United States

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