Race and the Accumulation of Wealth: Racial Differences in Net Worth over the Life Course, 1989-2009

Abstract

Using data from the 1989-2009 Panel Study of Income Dynamics, this research examines racial differences in wealth accumulation over the life course. We ask: (1) How have racial differences in wealth changed over time? (2) Do racial wealth gaps change over the life course? (3) Are racial gaps in net worth expanding, contracting, or staying the same over time and over the life course? and (4) Do these patterns differ by cohort? The analysis is informed by (1) the declining significance of race and post-racial perspectives; (2) the cumulative effects of discrimination explanation; and (3) the vintage hypothesis. Results show that African Americans' wealth as a percentage of whites' wealth fell in 2009. Results do not support the declining significance of race and post-racial perspectives. Partially consistent with the vintage hypothesis, post-1960s African Americans are relatively better off than are pre-1960s African Americans (compared with whites of the same cohort). Consistent with the cumulative effects of discrimination model, the African American-white wealth gap increases over the life course for each historical period. If current patterns persist, presumed gains made by young African Americans relative to young whites may turn out to be illusory as they progress through the life course.