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Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

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Listed:
  • Mathieu Despard

    (Washington University)

  • Michal Grinstein-Weiss

    (Washington University)

  • Shenyang Guo

    (Washington University)

  • Samuel Taylor

    (Washington University)

  • Blair Russell

    (U.S. Department of Housing and Urban Development)

Abstract

Low- and moderate-income (LMI) households need financial assets to help cope with income and expenditure shocks. Prior research identifies racial differences in wealth and wealth effects. We examined whether these gaps and effects exist for liquid financial assets. Using group invariance tests in structural equation modeling, we assessed the relationship between financial shocks and material hardship, as mediated by liquid financial assets and moderated by race/ethnicity among a sample of LMI tax filers (N = 7544). Though most study participants were employed (71%), average income was only $18,055 and average liquid financial assets was $4701. Black households had $2774 less in liquid financial assets compared to white households (p

Suggested Citation

  • Mathieu Despard & Michal Grinstein-Weiss & Shenyang Guo & Samuel Taylor & Blair Russell, 2018. "Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race," Journal of Economics, Race, and Policy, Springer, vol. 1(4), pages 205-216, December.
    • Handle: RePEc:spr:joerap:v:1:y:2018:i:4:d:10.1007_s41996-018-0011-y
    DOI: 10.1007/s41996-018-0011-y
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    References listed on IDEAS

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    1. Raj Chetty & Nathaniel Hendren & Maggie R Jones & Sonya R Porter, 2020. "Race and Economic Opportunity in the United States: an Intergenerational Perspective [“Intergenerational Mobility of Immigrants in the US Over Two Centuries,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 711-783.
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    Cited by:

    1. John Iceland & Arthur Sakamoto, 2022. "The Prevalence of Hardship by Race and Ethnicity in the USA, 1992–2019," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(5), pages 2001-2036, October.
    2. Stephen Roll & Olga Kondratjeva & Sam Bufe & Michal Grinstein-Weiss & Stephanie Skees, 2022. "Assessing the Short-Term Stability of Financial Well-Being in Low- and Moderate-Income Households," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 100-127, March.
    3. Brown, Sarah & Ghosh, Pulak & Pareek, Bhuvanesh & Taylor, Karl, 2021. "The protective role of saving: Bayesian analysis of British panel data," Journal of Empirical Finance, Elsevier, vol. 63(C), pages 57-72.
    4. Sam Bufe & Stephen Roll & Olga Kondratjeva & Stephanie Skees & Michal Grinstein-Weiss, 2022. "Financial Shocks and Financial Well-Being: What Builds Resiliency in Lower-Income Households?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 161(1), pages 379-407, May.
    5. Lan Sun & Garrick Small & Yueh-Hsia Huang & Tyng-Bin Ger, 2022. "Financial Shocks, Financial Stress and Financial Resilience of Australian Households during COVID-19," Sustainability, MDPI, vol. 14(7), pages 1-13, March.

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