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Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020

Institute Working Paper 59 | Published June 10, 2022

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Ellora Derenoncourt Short-Term Visitors
Chi Hyun Kim University of Bonn
Moritz Kuhn University of Mannheim
Moritz Schularick Kiel Institute for the World Economy and Sciences Po
Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020


The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped.

Published in: _Quarterly Journal of Economics_ (Vol. 139, Iss. 2, May 2024, pp. 693-750),