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Racial Differentials in the Wealth Effects of the Financial Crisis and Great Recession

Author

Listed:
  • Ryan Compton

    () (University of Manitoba)

  • Daniel Giedeman

    () (Grand Valley State University)

  • Leslie Muller

    () (Grand Valley State University)

Abstract

The financial crisis of 2007–2009 was arguably the most severe financial crisis in American history and the subsequent Great Recession was the worst economic downturn in the USA since the Great Depression. In this paper, we analyze data from the Panel Survey of Income Dynamics (PSID) to examine the effects of the crisis and recession on the wealth of White and Black families using graphical, cross section, and panel empirical models. While other studies have measured the short-term effects of the crisis and recession on American household wealth, we are able to look at longer-term wealth effects by incorporating data from the recently released 2015 wave of the PSID. Our results indicate that the negative consequences of the economic downturn on Black families’ wealth were severe and longer-lasting than for White families.

Suggested Citation

  • Ryan Compton & Daniel Giedeman & Leslie Muller, 2018. "Racial Differentials in the Wealth Effects of the Financial Crisis and Great Recession," Journal of Economics, Race, and Policy, Springer, vol. 1(2), pages 126-141, September.
  • Handle: RePEc:spr:joerap:v:1:y:2018:i:2:d:10.1007_s41996-018-0015-7
    DOI: 10.1007/s41996-018-0015-7
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    References listed on IDEAS

    as
    1. MacKinnon, James G & Magee, Lonnie, 1990. "Transforming the Dependent Variable in Regression Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 315-339, May.
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    7. Robert, Stephanie A. & Reither, Eric N., 2004. "A multilevel analysis of race, community disadvantage, and body mass index among adults in the US," Social Science & Medicine, Elsevier, vol. 59(12), pages 2421-2434, December.
    8. N. Chiteji & Darrick Hamilton, 2002. "Family connections and the black-white wealth gap among middle-class families," The Review of Black Political Economy, Springer;National Economic Association, vol. 30(1), pages 9-28, June.
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    More about this item

    Keywords

    D31; I31; J15;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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