The Racial Wealth Gap and The Legacy of Racially Restrictive Housing Covenants

Abstract

One of the ways in which Black Americans were prevented from accumulating housing wealth during the 20th century was through the use of racially restrictive covenants. Recent research provides evidence that the current wealth distribution is influenced in part by historical inequalities in opportunities to create wealth. In Philadelphia and other US cities, racial covenants made it difficult for Black Americans to acquire homes, and affected both prices paid and returns to home ownership. Future research will assemble the data necessary to understand the long-run consequences of these barriers on the acquisition and intergenerational transmission of wealth in Philadelphia.

Keywords: Wealth inequality, racial discrimination, housing covenant, barriers to home ownership, intergenerational wealth transfers

JEL Classification: D31, D64, J15, R31