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Accounting for racial wealth disparities in the United States

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Abstract

Using data from the Survey of Consumer Finances, this paper updates and extends previous research on the racial wealth gap in the United States. We explore several hypotheses that help explain differential wealth accumulation by racial groups, including the importance of receiving inheritances and other financial support from relatives and the conditions in local real estate markets. By exploring the disparities among white, black, and Hispanic families, we make new contributions to the literature. We find that observable factors account for the entire wealth gap between white and Hispanic families and most of the gap between white and black families. Differences in human capital, demographics, and family financial support each make substantial contributions to the wealth gaps we observe between white and nonwhite families. Yet a substantial portion of the wealth gap between white and black families remains unaccounted for after a detailed decomposition. This unexplained portion is greater at the top of the wealth distribution.

Suggested Citation

  • Gustavo A. Suarez & Jeffrey P. Thompson, 2019. "Accounting for racial wealth disparities in the United States," Working Papers 19-13, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:19-13
    DOI: 10.29412/res.wp.2019.13
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    Cited by:

    1. Edward N. Wolff, 2022. "African‐American and Hispanic Income, Wealth and Homeownership since 1989," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 189-233, March.
    2. , 2021. "Racial Wealth Disparities: Reconsidering the Roles of Human Capital and Inheritance," Working Papers 22-3, Federal Reserve Bank of Boston.
    3. Hope Bodenschatz & Gerald Eric Daniels Jr. & Jeffrey P. Thompson, 2023. "Decomposing Lifetime-Earnings Differences between White, Black, and Hispanic Families," Working Papers 23-14, Federal Reserve Bank of Boston.

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    More about this item

    Keywords

    racial wealth gap; inequality; inheritance; savings;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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