Thomas M. Shapiro

Race and wealth

One of the most heated scholarly controversies in the area of racial equality and social justice in the 1980s has been the dispute over the nature, cause, and meaning of economic changes occurring within the black community. Although this debate has important public policy consequences, most of the research on which the debate is based is concerned with income. We argue that a broader interpretation of life chances should include an examination of wealth as well as income. Using the 1984 Survey of Income and Program Participation (SIPP), we examine black and white patterns of wealth inequality. Our analysis uncovers a depth of inequality beyond that which is found when income alone is considered. Furthermore, we find that both race and class are important in determining patterns of racial inequalities in wealth.

The Widening Racial Wealth Gap: Why Wealth Is Not Color Blind

Researchers began to explore the wealth holdings of households by race in the mid-1980s, when data became available for the first time. The magnitude and implications of these early findings were shocking: most found that, on average, black households owned only a dime for each dollar of wealth owned by white households (Lui, Robles, and Leondar- Wright 2006). This difference was much larger than the prevailing income gap of 60 cents-to-the-dollar. More alarmingly, the racial wealth gap has increased further since it was first analyzed. Our analysis reveals an increase of

“Family Achievements?”: How a College Degree Accumulates Wealth for Whites and Not For Blacks

151,000 in the absolute racial wealth gap between 1984 and 2009. This chapter empirically examines the main reasons behind the rise in the racial wealth gap over the past 25 years, deepening the analytic and policy understanding and narrative required to effectively disrupt and reverse this trend.

Black Wealth/ White Wealth: A New Perspective on Racial Inequality

A college education has been linked to higher life-time earnings and better economic achievements, so the expectation would be that it is also linked to higher net wealth for everybody. However, recent analyses challenge this hypothesis and find that the expectation holds true for White college-educated households but not for Black college-educated households. To examine this finding further and investigate the role of family financial transfers in household net wealth, the authors perform a mixed-method study using data from the Panel Study of Income Dynamics for a 24-year period, 1989-2013, and qualitative data from the Institute on Assets and Social Policy Levering Mobility study. Their results confirm that White college-educated households amass wealth, whereas the wealth of their Black counterparts declines. The authors also estimate the impact of just inheritance or large financial gifts and find that they decrease the existing racial wealth gap by nearly

The Hidden Cost of Being African American: How Wealth Perpetuates Inequality

40,000, or 20 percent. Further analyses demonstrate that White college graduates are significantly and substantially more likely to provide and receive financial support for education and/or a home purchase, while Black college graduates are significantly more likely to financially support their parents. Multivariate regression analysis identifies receipt of financial support for education and a home purchase as a positive contributor to net wealth and financial help for parents as a negative contributor to net wealth, disadvantaging Black college-educated households, who are less likely to receive and more likely to give financial support. Longitudinal interview data collected in the Institute on Assets and Social Policy Leveraging Mobility study illustrate the mechanisms of family financial transfers and their relationship to wealth accumulation, contrasting the White and Black households’ experiences. The discussion underscores the need to better understand intergenerational wealth and wealth sharing within families when studying wealth outcomes and highlights the role of family financial wealth transfers in creating opportunities for those who benefit the most—mostly White college-educated households.