Abstract
In the United States, racial disparities in wealth are vast, yet their causes are only partially understood. In Being Black, Living in the Red, Conley (1999) argued that the sociodemographic traits of young blacks and their parents, particularly parental wealth, wholly explain their wealth disadvantage. Using data from the 1980–2009 waves of the Panel Study of Income Dynamics, I show that this conclusion hinges on the specific sample considered and the treatment of debtors in the sample. I further document that prior research has paid insufficient attention to the possibility of variation in the association between wealth and race at different points of the net worth distribution. Among wealth holders, blacks remain significantly disadvantaged in assets compared with otherwise similar whites. Among debtors, however, young whites hold more debt than otherwise similar blacks. The results suggest that, among young adults, debt may reflect increased access to credit, not simply the absence of assets. The asset disadvantage for black net wealth holders also indicates that research and policy attention should not be focused only on young blacks “living in the red.”
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Notes
Quantile regression is another common analytic technique used when variation is suspected in the association between a key independent variable and the outcome. However, quantile regression estimates coefficients at quantiles of the conditional distribution of the outcome and is therefore not appropriate for considering the conceptual question addressed here, which relates to the unconditional distribution.
In general, household wealth and income values are imputed by the PSID. In 1994, 28 households that would otherwise have been eligible for the sample did not have household wealth imputed and are dropped from the sample.
For years in which only categorical information is available, the midpoint of each category is used. Supplemental models that specified parental education in the same categories as young adults’ education produced similar results.
Three-digit occupational codes are available beginning in 1981. For the first cohort, only four years are used.
If information is not available for all five years, information from the available years is rescaled to be comparable to observations with full information.
BBLR reports welfare receipt in the base year (1984). I assume that this is welfare receipt as reported in the 1984 survey, which pertains to receipt in calendar year 1983.
Even in the expanded sample, 44 % of otherwise-eligible black men are not heads of their own households. However, when the sample is limited to individuals 27 years old and older, at least 80 % of the cohort is included in the sample for each race-gender combination, and the results are similar to those from the full age range. Therefore, I maintain the larger sample for increased statistical power.
There is no evidence that either of these results changes significantly with age. The results are similar when the sample is limited to blacks and whites. Prior evidence suggests that wealth among blacks is less responsive to income and demographic traits than it is among whites (Altonji and Doraszelski 2005). I find evidence of significant differences between whites and blacks in neither the association between own income and net worth nor the association between parental wealth and net worth.
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Acknowledgments
Hanley Chiang, Dalton Conley, Sheldon Danziger, Luke Heinkel, Anju Paul, Fabian Pfeffer, Jane Rochmes, Jessi Streib, and three anonymous reviewers provided helpful comments on this project. Earlier versions of this article were presented at the Fall Research Conference of the Association for Public Policy Analysis & Management, November 2011; and at the 2012 annual meeting of the Population Association of America. The Panel Study of Income Dynamics is primarily sponsored by the National Science Foundation, the National Institute of Aging, and the National Institute of Child Health and Human Development and is conducted by the University of Michigan.
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Killewald, A. Return to Being Black, Living in the Red: A Race Gap in Wealth That Goes Beyond Social Origins. Demography 50, 1177–1195 (2013). https://doi.org/10.1007/s13524-012-0190-0
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DOI: https://doi.org/10.1007/s13524-012-0190-0