The Dynamics of the Racial Wealth Gap

Abstract

We reconcile the large and persistent racial wealth gap with the smaller racial earnings gap, using a general equilibrium heterogeneous-agents model that matches racial differences in earnings, wealth, bequests, and returns to savings. Given initial racial wealth inequality in 1962, our model attributes the slow convergence of the racial wealth gap primarily to earnings, with much smaller roles for bequests or returns to savings. Cross-sectional regressions of wealth on earnings using simulated data produce the same racial gap documented in the literature. One-time wealth transfers have only transitory effects unless they address the racial earnings gap.

Youth for Youth: Raising the voices of children of incarcerated parents and implications for policy and practice

“…Cleveland faces significant racial inequities in terms of educational attainment, socioeconomic status, and health outcomes (Aliprantis et al, 2019); the city's long history of racist housing, real estate, and planning policies deliberately limited the opportunities for African Americans to essential resources for supporting their wellbeing (Kirwan Institute, 2015). During the 1930s, African Americans were explicitly excluded from community institutions, businesses, and labor markets and segregated into separate, less-resourced schools, housing structures, and hospitals (Encyclopedia of Cleveland History, 2020).…”

Monetary Policy with Racial Inequality

“…Under the assumption that preferences are common across racial groups, the dispersion of ι s could be interpreted as Hispanic and Black workers facing disadvantages in the financial market. In the literature trying to account for the Black-White wealth gap, Aliprantis et al (2019) downplay that the Black-White differences in the rate of return in explaining the wealth gap, while Bartscher et al (2021) and Derenoncourt et al (2022) emphasize the differences in portfolio composition and differences in returns of assets in the widening of the wealth gap in the recent decades. Finally, one of the possible reasons why racial minorities hold smaller amount of wealth is the existence of means-tested social insurance, as emphasized by Hubbard et al (1995).…”

“…They build a stylized macro model with two (Black and White) agents to study policy implications. Aliprantis et al (2019) and Boerma and Karabarbounis (Forthcoming) ask what is behind the racial wealth gap. Cajner et al (2017) document racial difference in labor market outcomes.…”

The Effects of Racial Segregation on Intergenerational Mobility: Evidence from Historical Railroad Placement

“…First, these calculations only apply to children who were younger than age 18 and living in our sample cities as of the year 2000. Second, these calculations do not account for the harmful impacts of segregation on parents' labor market outcomes or costs associated with the dynamics of wealth accumulation (Darity and Frank, 2003;Aliprantis, Carroll and Young, 2019;Ashman and Neumuller, 2020). Third, our focus on income does not capture how segregation affects other important determinants of utility such as the psychological well-being (Clark, Chein and Cook, [1952] 2004) or other non-economic costs in terms of safety (Cook, Logan and Parman, 2018).…”