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Analytic Approaches to Measuring the Black-White Wealth Gap

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  • Jermaine Toney
  • Fenaba R. Addo
  • Darrick Hamilton

Abstract

Does the measurement of the racial wealth gap shift depending on the model, method, and dataset used? We contrast the traditional mean Oaxaca-Blinder decomposition with the distributional Recentered Influence Function (RIF) methods. The untransformed, logarithm-transformed, and inverse hyperbolic sine-transformed versions in both the Survey of Consumer Finances and Panel Study of Income Dynamics datasets exhibit similarities. The Oaxaca-Blinder (mean) decomposition highlights that receiving an inheritance explains a larger portion of the racial wealth gap than educational attainment. Conversely, the RIF method at the median suggests that educational attainment accounts for more of the wealth gap than inheritance receipt.

Suggested Citation

  • Jermaine Toney & Fenaba R. Addo & Darrick Hamilton, 2024. "Analytic Approaches to Measuring the Black-White Wealth Gap," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 186-190, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:186-90
    DOI: 10.1257/pandp.20241124
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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