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Updating the Racial Wealth Gap

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Abstract

Using newly available data from the Survey of Consumer Finances, this paper updates and extends the literature exploring the racial wealth gap. We examine several hypotheses proposed by previous researchers, including the importance of inherited wealth and other family support and that of trends in local real estate markets, and also extend the literature by exploring the gap across the distribution of wealth and simultaneously considering white, African American and Hispanic households. The findings indicate that observable factors account for all of wealth gap between white and Hispanic households and most of the gap between white and black families ? more than in most previous research ? but a substantial unexplained portion remains. Wealth differences between black and white families are completely due to different asset holdings, while wealth differences between black and Hispanic families are mostly a result of different debt holdings. Home ownership and educational attainment are the single largest observable factors that account for the racial wealth gaps, with income and financial assistance from family members playing important roles as well. The unexplained portion of the wealth gap between white and non-white families is greater at the top of the wealth distribution.

Suggested Citation

  • Gustavo A. Suarez & Jeffrey P. Thompson, 2015. "Updating the Racial Wealth Gap," Finance and Economics Discussion Series 2015-76, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2015-76
    DOI: 10.17016/FEDS.2015.076r1
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    Cited by:

    1. Pia Orrenius & Madeline Zavodny, 2021. "How Foreign- and U.S.-Born Latinos Fare during Recessions and Recoveries," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 193-206, May.
    2. William R. Emmons & Lowell R. Ricketts, 2017. "College Is Not Enough: Higher Education Does Not Eliminate Racial and Ethnic Wealth Gaps," Review, Federal Reserve Bank of St. Louis, vol. 99(1).
    3. John A. TATOM, 2022. "Overestimates of the racial wealth gap and the case for reparations," Journal of Social and Administrative Sciences, EconSciences Journals, vol. 9(3), pages 152-173, September.
    4. Luke Petach & Daniele Tavani, 2021. "Differential Rates of Return and Racial Wealth Inequality," Journal of Economics, Race, and Policy, Springer, vol. 4(3), pages 115-165, September.
    5. Kuhn, Moritz & Ríos-Rull, José-Víctor, 2025. "Income and Wealth Inequality in the United States: An Update Including the 2022 Wave," CEPR Discussion Papers 20267, Centre for Economic Policy Research.
    6. Mariela Dal Borgo, 2019. "Ethnic and racial disparities in saving behavior," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 253-283, June.
    7. Kathryn Wiley, 2025. "‘This is How you Will Make It’: Mothers, Othermothers, and Black Women’s Family Financial Socialization," Journal of Family and Economic Issues, Springer, vol. 46(2), pages 397-410, June.

    More about this item

    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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