The Racial Saving Gap Enigma: Unraveling the Role of Institutions

Willie Belton and Ruth Osarenti Oyelere nee Uwaifo ()

No 37089, 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: It has been well documented in the literature that ethnicity matters significantly in the determination of savings. In particular, African-American savings lag far behind that of other ethnic groups. Similarly, the literature also provides evidence of the long-lived nature of institutions and the link between institutions and culture. In this paper, we provide an explanation for the savings gap that still exists between African-Americans and White Americans even after accounting for appropriate factors that can lead to savings differentials. We initially provide evidence that the savings gap exists and persist after including several control variables in a regression analysis. We then provide evidence that the persistent gap can not be attributed solely to racial discrimination but can be explained by the response of culture to institutional scaffolding erected many years earlier. Using a novel within race decomposition we provide evidence that past institutions transmitted through culture can help to explain this persistent saving disparity.

Keywords: Savings gap; Institutions; Race; Culture; Institutional and Behavioral Economics; Political Economy; D14; D31; J15; J78; N30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-soc and nep-ure
Date: 2008
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Working Paper: The Racial Saving Gap Enigma: Unraveling the Role of Institutions (2008)
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