Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020

Abstract

The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and convergence via income growth and savings has come to a halt.

Race-neutral vs race-conscious: Using algorithmic methods to evaluate the reparative potential of housing programs

“…Finally, while the closing of the racial housing asset gap through housing asset gains is considered a means of evaluating the effectiveness of different reparative strategies, it must be acknowledged that measuring potential housing asset gains is only one way of approximating the closing of the racial wealth gap. The non-housing racial wealth gap, which incorporates bonds or stocks, is even wider (Derenoncourt et al, 2022), and therefore even if the racial housing wealth gap were fully closed, other wealth gaps would still need to be addressed. Also, the absence of credit scores from the HMDA data may affect the accuracy of the models.…”

“…The racial wealth gap between white and Black individuals in the United States is persistent, with data from the 2019 Survey of Consumer Finance (SCF) indicating that white individuals possess six times more wealth than Black individuals (Derenoncourt et al, 2022). This gap is a result of centuries of discriminatory policies and practices, beginning with transatlantic slavery and the conquest of America (Park, 2016), and continuing through Jim Crow laws, residential segregation (Massey and Denton, 2003), and discriminatory mortgage lending practices (Immergluck, 2004;Rothstein, 2018), commonly referred to as redlining (Winling and Michney, 2021), among others.…”