The Racial Wealth Gap, 1860-2020

Awarded Scholars:
Ellora Derenoncourt, University of California, Berkeley
Chi Hyun Kim, University of Bonn
Moritz Kuhn, University of Bonn
Moritz Schularick, University of Bonn
Project Date:
Jun 2021
Award Amount:

Cofunded with the Bill & Melinda Gates Foundation

The racial wealth gap is very large, with a white-to-Black average wealth ratio of 6:1 in 2019, a disparity that has been remarkably stable over the last fifty years. However, there is no systematic study of the evolution of the racial wealth gap from Emancipation to the present. This lack is due, at least in part, to the limited availability of wealth data for Blacks and whites before 1968, restricting much of the analysis to recent decades. Economist Ellora Derenoncourt and her colleagues are proposing an ambitious data collection and data harmonization effort to provide a historical account of the racial wealth gap from 1860 to 2020. They will address two primary questions. First, what has been the long-run evolution of the racial wealth gap and wealth inequality? And second, what factors have shaped the gap? The project will also have implications for the efficacy of policies such as reparations, baby bonds, and wealth taxes in reducing the racial wealth gap and wealth inequality. The investigators will harmonize data from state-level tax records, the Census of the Population, the Census of Agriculture, data on Black banks, and a harmonized version of the Survey of Consumer Finances from 1949 to 2019. State-level tax auditor reports are available for six Southern states for 1866-1916 and contain either county-level aggregates of assessed wealth by racial group or aggregate tax payments by racial group, allowing the investigators to impute aggregate wealth for Blacks and whites.  For national wealth aggregates and per capita measures for the late 19th century, they draw on the decennial censuses for 1860 and 1870. For estimates of Black wealth at the national level, the investigators will digitize data from Monroe Work’s The Negro Year Book in select years between 1863 and 1936, which documents the growth of Black churches, farmlands, and businesses, as well as other assets and other indicators of Black social and economic progress. For 1913-1936, they will use estimates from Saez and Zucman on aggregate wealth for the U.S. and subtract Work’s estimates of Black wealth to generate a proxy for white wealth. From 1949 to the present, they have a newly harmonized series of the Survey of Consumer Finance, with micro-level data on households’ socioeconomic characteristics and wealth composition. This allows them to study the joint distribution of income and wealth separately for blacks and whites for this period.


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