Quantifying Specific and Systemic Factors in the Black-White Wealth Gap in the United States

57 Pages Posted: 30 Mar 2021 Last revised: 25 Jan 2024

See all articles by Hamidreza Habibi

Hamidreza Habibi

University of California, Santa Cruz

Rongchen Liu

Meta Platforms Inc; University of California, Santa Cruz

Anirban Sanyal

UCSC

Nirvikar Singh

University of California, Santa Cruz

Date Written: January 24, 2024

Abstract

This paper provides a new quantification of the role of specific and systemic factors in racial wealth disparities in the United States. Specific or individual factors include characteristics such as education, occupation, homeownership and inheritance. Systemic factors can be captured by considering the effect of differences in characteristics when taken together. Utilizing the 2016 Survey of Consumer Finances and various empirical strategies for decomposing the contributors to wealth differences, we show that much of the Black-White wealth gap in the US is associated with unmeasured structural or systemic factors, rather than measured individual characteristics. While a combination of inheritance, education, and occupation may account for a part of differences in wealth levels across races, none of them alone could provide a pathway to reduce or eliminate the disparities. We also use quantile regressions to reinforce the view that the racial wealth gap exists
within slices of the wealth distribution, and is not only due to possible class effects.

Keywords: wealth inequality, racial inequality, education, inheritance, wealth patterns

JEL Classification: D31, D63, G51, J15, Z13

Suggested Citation

Habibi, Hamidreza and Liu, Rongchen and Sanyal, Anirban and Singh, Nirvikar, Quantifying Specific and Systemic Factors in the Black-White Wealth Gap in the United States (January 24, 2024). Available at SSRN: https://ssrn.com/abstract=3800592 or http://dx.doi.org/10.2139/ssrn.3800592

Hamidreza Habibi

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

Rongchen Liu

Meta Platforms Inc ( email )

Menlo Park, CA
United States

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

Anirban Sanyal

UCSC ( email )

CA
United States

Nirvikar Singh (Contact Author)

University of California, Santa Cruz ( email )

Department of Economics
E2 Building
Santa Cruz, CA 95064
United States
831-459-4093 (Phone)
831-459-5077 (Fax)

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