The Racial Saving Gap Enigma: Unraveling the Role of Institutions
Willie Belton and
Ruth Uwaifo Oyelere
No 3545, IZA Discussion Papers from Institute of Labor Economics (IZA)
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 savings for 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 (search for similar items in EconPapers)
JEL-codes: D14 D31 J11 J15 J71 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2008-06
New Economics Papers: this item is included in nep-dev, nep-pke, nep-soc and nep-ure
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Citations: View citations in EconPapers (10)
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Working Paper: The Racial Saving Gap Enigma: Unraveling the Role of Institutions (2008)
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