The Social and Statistical Construction of Race

We examine the social construction of race in the United States, from Reconstruction to the modern day, and show how this affects statistical differences across and within racial categories. During the Reconstruction era, people with the same light brown skin tones, recorded by the Freedman's Bank (1865-1874), were more likely racialized as White or Mulatto in the 1870 Census if they were wealthier or literate. Racial assignment of descendants remained fluid through the 1940 Census. In modern data, self-reported race also varies with income and college completion among people with light brown skin tones. This endogenous racial assignment increases cross-race wealth gaps, which we show can be adjusted using sub-samples with data on skin tone or ancestry. Endogenous race also induces selection when controlling for race that, for example, attenuates the relationship between wealth and skin tone.