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Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020

Author

Listed:
  • Ellora Derenoncourt

    (Princeton University)

  • Chi Hyun Kim

    (Universität Bonn = University of Bonn)

  • Moritz Kuhn

    (University of Mannheim = Universität Mannheim)

  • Moritz Schularick

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Kiel Institute for the World Economy - Kiel Institute for the World Economy)

Abstract

The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and convergence via income growth and savings has come to a halt.

Suggested Citation

  • Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2023. "Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020," Post-Print hal-04212052, HAL.
  • Handle: RePEc:hal:journl:hal-04212052
    DOI: 10.1093/qje/qjad044
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    References listed on IDEAS

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    1. William J. Collins & Robert A. Margo, 2011. "Race and Home Ownership from the Civil War to the Present," NBER Working Papers 16665, National Bureau of Economic Research, Inc.
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    8. Teresa Kroeger & Graham Wright, 2021. "Entrepreneurship and the Racial Wealth Gap: The Impact of Entrepreneurial Success or Failure on the Wealth Mobility of Black and White Families," Journal of Economics, Race, and Policy, Springer, vol. 4(3), pages 183-195, September.
    9. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
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    Cited by:

    1. Tan, Eugene & Zeida, Teegawende H., 2024. "Consumer demand and credit supply as barriers to growth for Black-owned startups," Journal of Monetary Economics, Elsevier, vol. 143(C).
    2. Thomas Blanchet, 2022. "Uncovering the Dynamics of the Wealth Distribution," Working Papers hal-03865295, HAL.
    3. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2023. "Unemployment Risk, Portfolio Choice, and the Racial Wealth Gap," Working Papers 332, Princeton University, Department of Economics, Center for Economic Policy Studies..
    4. LaVoice, Jessica & Vamossy, Domonkos F., 2024. "Racial disparities in debt collection," Journal of Banking & Finance, Elsevier, vol. 164(C).
    5. Waitkus, Nora & Savage, Mike & Toft, Maren, 2025. "Wealth and class analysis: exploitation, closure and exclusion," LSE Research Online Documents on Economics 124534, London School of Economics and Political Science, LSE Library.
    6. Guanyi Yang & Srinivasan Murali, 2024. "Macroeconomics of Racial Disparities: Discrimination, Labor Market, and Wealth," Papers 2412.00615, arXiv.org, revised Dec 2024.
    7. Doerrenberg, Philipp & Duncan, Denvil & Li, Danyang, 2024. "The (in)visible hand: Do workers discriminate against employers?," Journal of Public Economics, Elsevier, vol. 231(C).
    8. David Sturrock, 2023. "Wealth and welfare across generations," IFS Working Papers W23/15, Institute for Fiscal Studies.
    9. Jonathan Cribb & Laurence O'Brien & David Sturrock, 2025. "Ethnic differences in retirement wealth accumulation in the UK," IFS Working Papers W25/02, Institute for Fiscal Studies.
    10. Stephen B. Billings & Adam Soliman, 2023. "The erosion of homeownership and minority wealth," CEP Discussion Papers dp1967, Centre for Economic Performance, LSE.
    11. Waitkus, Nora & Savage, Mike & Toft, Maren, 2024. "Wealth and class analysis: exploitation, closure and exclusion," LSE Research Online Documents on Economics 124635, London School of Economics and Political Science, LSE Library.
    12. Branson, Nicola & Hjellbrekke, Johs & Leibbrandt, Murray & Ranchhod, Vimal & Savage, Mike & Whitelaw, Emma, 2024. "The socioeconomic dimensions of racial inequality in South Africa: a social space perspective," LSE Research Online Documents on Economics 123895, London School of Economics and Political Science, LSE Library.
    13. Billings, Stephen B. & Soliman, Adam, 2023. "The erosion of homeownership and minority wealth," LSE Research Online Documents on Economics 126821, London School of Economics and Political Science, LSE Library.

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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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