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Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap? New Evidence From Longitudinal Data

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  • Signe-Mary McKernan
  • Caroline Ratcliffe
  • Margaret Simms
  • Sisi Zhang

Abstract

How do private transfers differ by race and ethnicity, and do such differences explain the racial and ethnic disparity in wealth? Using the Panel Study of Income Dynamics, this study examines private transfers by race and ethnicity in the United States and explores a causal relationship between private transfers and wealth. Panel data and a family-level fixed-effect model are used to control for the endogeneity of private transfers. Private transfers in the form of financial support received and given from extended families and friends, as well as large gifts and inheritances, are examined. We find that African Americans and Hispanics (both immigrant and nonimmigrant) receive less in both types of private transfers than whites. Large gifts and inheritances, but not net financial support received, are related to wealth increases for African American and white families. Overall, we estimate that the African American shortfall in large gifts and inheritances accounts for 12 % of the white-black racial wealth gap. Copyright Population Association of America 2014

Suggested Citation

  • Signe-Mary McKernan & Caroline Ratcliffe & Margaret Simms & Sisi Zhang, 2014. "Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap? New Evidence From Longitudinal Data," Demography, Springer;Population Association of America (PAA), vol. 51(3), pages 949-974, June.
    • Handle: RePEc:spr:demogr:v:51:y:2014:i:3:p:949-974
    DOI: 10.1007/s13524-014-0296-7
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    8. Rob Gruijters & Zachary van Winkle & Anette Fasang, 2023. "Life Course Trajectories and Wealth Accumulation in the United States: Comparing Late Baby Boomers and Early Millennials," Post-Print hal-04278042, HAL.
    9. Jermaine Toney & Darrick Hamilton, 2022. "Economic insecurity in the family tree and the racial wealth gap," Review of Evolutionary Political Economy, Springer, vol. 3(3), pages 539-574, October.
    10. Jessica LaVoice & Domonkos F. Vamossy, 2019. "Racial Disparities in Debt Collection," Papers 1910.02570, arXiv.org, revised Jun 2023.
    11. Gennetian, Lisa A. & Rodrigues, Christopher & Hill, Heather D. & Morris, Pamela A., 2018. "Stability of income and school attendance among NYC students of low-income families," Economics of Education Review, Elsevier, vol. 63(C), pages 20-30.
    12. Begley, Jaclene, 2017. "Legacies of homeownership: Housing wealth and bequests," Journal of Housing Economics, Elsevier, vol. 35(C), pages 37-50.
    13. Muckenhuber, Mattias & Rehm, Miriam & Schnetzer, Matthias, 2021. "The migrant wealth gap at the household level: Evidence from RIF regressions for Austria," ifso working paper series 15, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    14. Njeri Kagotho & Neema N. Salim & Michele Patak‐Pietrafesa & Stavroula Kyriakakis, 2021. "Inheriting the family farm: Generational wealth transfers in rural Kenya," Development Policy Review, Overseas Development Institute, vol. 39(S1), pages 42-60, August.
    15. Peter Ganong & Damon Jones & Pascal J. Noel & Fiona E. Greig & Diana Farrell & Chris Wheat, 2020. "Wealth, Race, and Consumption Smoothing of Typical Income Shocks," NBER Working Papers 27552, National Bureau of Economic Research, Inc.
    16. Danielle Winchester & Sandra Huston, 2013. "Keeping Your Financial Planner to Yourself: Racial and Cultural Differences in Financial Planner Referrals," The Review of Black Political Economy, Springer;National Economic Association, vol. 40(2), pages 165-184, June.
    17. Yoko Mimura, 2021. "Associations Between Financial Transfer from Grandparents and Family Expenditures for Children’s Precollege Education in Japan," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 715-728, December.
    18. Deokrye Baek & Christian Raschke, 2016. "The Impact of SNAP Vehicle Asset Limits on Household Asset Allocation," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 146-175, July.
    19. Charles Betsey, 2014. "Black-White Differences in Consumption: An Update and Some Policy Implications," The Review of Black Political Economy, Springer;National Economic Association, vol. 41(3), pages 259-270, September.
    20. Gregory Sharp & Ellen Whitehead & Matthew Hall, 2020. "Tapped Out? Racial Disparities in Extrahousehold Kin Resources and the Loss of Homeownership," Demography, Springer;Population Association of America (PAA), vol. 57(5), pages 1903-1928, October.

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