Understanding and Quantifying Aspects of the Black-White Wealth Gap in the United States

55 Pages Posted: 30 Mar 2021 Last revised: 1 Nov 2021

See all articles by Nirvikar Singh

Nirvikar Singh

University of California, Santa Cruz

Anirban Sanyal

UCSC

Rongchen Liu

University of California, Santa Cruz

Date Written: October 30, 2021

Abstract



This paper analyzes and quantifies how differences in the wealth levels of Black and White Americans relate to socioeconomic characteristics, including education, occupation, asset portfolio structures, inheritance and financial literacy, using data from the 2016 Survey of Consumer Finances. Some combination of inheritance, education and occupation is significantly related to differences in wealth levels across the races. However, education, homeownership, business ownership and financial literacy are not by themselves pathways even to reducing wealth gaps, let alone eliminating them. Much of the wealth gap is related to unmeasured structural or systemic factors, rather than measured characteristics: this is estimated by a decomposition of overall wealth differences into those associated with characteristics or endowments, and those with differential impacts (estimated by regression coefficients) across groups. Some of the empirical approaches in the estimates are relatively novel in the context of quantifying individual and systemic contributors to the racial wealth gap. Additionally, quantile regressions, which allow for different impacts of characteristics at different portions of the wealth distribution, enable some inferences about the role of class vs. race. The results reinforce the view that race matters for the wealth gap, even after accounting for class.

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

JEL Classification: D31, D63, G51, J15

Suggested Citation

Singh, Nirvikar and Sanyal, Anirban and Liu, Rongchen, Understanding and Quantifying Aspects of the Black-White Wealth Gap in the United States (October 30, 2021). Available at SSRN: https://ssrn.com/abstract=3800592 or http://dx.doi.org/10.2139/ssrn.3800592

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)

Anirban Sanyal

UCSC ( email )

CA
United States

Rongchen Liu

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

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