Social Security and the Racial Wealth Gap

26 Pages Posted: 31 Oct 2023

See all articles by Sylvain Catherine

Sylvain Catherine

University of Pennsylvania - Finance Department

Natasha Sarin

Yale University Law School and Yale School of Management

Date Written: September 2023

Abstract

In the United States, the median Black household earns 30 percent less per adult than the median White household, yet the latter has over six times more marketable wealth than the former. We revisit this puzzle by expanding our wealth concept to include the present value of social security payments. Once social security wealth is accounted for, the racial wealth gap has narrowed over the last 30 years. In 1989, the median White American household owned over four times more total wealth than their Black and Hispanic American counterparts, but under twice as much in 2019. We argue for the importance of including social security in our study of wealth inequality, because of the role it plays in shaping the marketable wealth distribution and the recent rise in its value.

Keywords: wealth, inequality, Social Security, racial wealth differences

JEL Classification: D31, D63, H55, J15

Suggested Citation

Catherine, Sylvain and Sarin, Natasha, Social Security and the Racial Wealth Gap (September 2023). Wharton Pension Research Council Working Paper No. 2023-19, Available at SSRN: https://ssrn.com/abstract=4617406 or http://dx.doi.org/10.2139/ssrn.4617406

Sylvain Catherine (Contact Author)

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

Natasha Sarin

Yale University Law School and Yale School of Management ( email )

127 Wall St.
New Haven, CT 06511
United States
2034325552 (Phone)
20001-4959 (Fax)

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