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Wednesday, February 27, 2013

What Explains the Racial Wealth Gap?

 Opportunity is far from equal:

What Explains the Racial Wealth Gap?, by Neil Shah, WSJ: White families build wealth faster than black households... What explains this growing divide? ... The findings are the latest evidence that barriers in workplaces, schools and communities — rather than personal attributes and cultural factors — may be making it harder for blacks to accumulate wealth than whites over time. ...
Home ownership is the biggest contributor to net worth. But white families, the researchers say, buy homes and start acquiring equity on average eight years earlier than black families, largely because white families can lean on their own families for help with down payments...
The recession had a disproportionately bad effect on blacks, researchers said. “Half the collective wealth of African-American families was stripped away during the Great Recession due to the dominant role of home-equity in their wealth portfolios and the prevalence of predatory high-risk loans in communities of color,” said Thomas Shapiro, director of the Institute on Assets and Policy. “Borrowers of color are more than twice as likely to lose their homes.”
Meanwhile, accomplishments like job promotions and pay increases don’t appear to pay off for black families the way they do for whites. ... Differences related to inheritances, college education and unemployment also play a role. Whites are five times more likely to inherit, while 80% of black students graduate with debt compared with 64% for whites. “Similar college degrees produce more wealth for whites,” Shapiro said.

    Posted by on Wednesday, February 27, 2013 at 10:31 AM in Economics | Permalink  Comments (16)


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