Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap?

Journal Article

Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap?

New Evidence From Longitudinal Data

Abstract

How do private transfers differ by race and ethnicity, and do such differences explain the racial and ethnic disparity in wealth? Using panel data and a family-level fixed-effect model, we find that African Americans and Hispanics (immigrant and nonimmigrant) receive less in both financial support and large gifts and inheritances than whites. Large gifts and inheritances, but not net financial support received, are related to wealth increases for African American and white families. Overall, we estimate that the African American shortfall in large gifts and inheritances accounts for 12 percent of the white-black racial wealth gap.

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