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The Racial Wealth Gap and the Role of Firm Ownership

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  • Avi Lipton

Abstract

This paper develops an overlapping generations model that isolates the impact of the US racial wealth gap in 1962 on the long-run dynamics of wealth. The model predicts that one component of the initial gap, firm ownership, coupled with the intergenerational transfer of that ownership results in a permanent wealth gap independent of other dimensions of inequality. This implies that even if all discrimination against Black Americans had ceased upon the end of Jim Crow, the wealth gap would have persisted without a reparations policy addressing the fact that the initial firm ownership gap arose in the first place.

Suggested Citation

  • Avi Lipton, 2022. "The Racial Wealth Gap and the Role of Firm Ownership," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 351-355, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:351-55
    DOI: 10.1257/pandp.20221110
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-

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