Understanding the Black-White Wealth Gap in the United States

Abstract

This paper examines the relationship between wealth holdings and patterns of various household characteristics, including education, occupation, wealth portfolio structures and inheritance. The focus is on comparing the wealth levels of Black and White Americans, and relating differences in these levels to socio-economic characteristics. We find that a combination of inheritance, education and occupation is significantly related to differences in wealth levels. However, household characteristics such as education, homeownership or business ownership are not by themselves pathways to reducing wealth gaps, let alone eliminating them. Financial literacy also does not appear to play a role in explaining the wealth gap.