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Ethnic and Racial Disparities in Saving Behavior

Dal Borgo Mariela

No 2018-02, Working Papers from Banco de México

Abstract: Using data of households approaching retirement in the U.S., I find that the Whites' median saving rates are 9 percentage points larger than the Mexican Americans' rates (ethnic gap) and than the African Americans' rates (racial gap). Two-thirds of each gap correspond to changes in asset prices and a third to households' active decisions. Quantile decompositions show that differences in income and education explain most of the active saving gaps. This implies that wealth inequality is not attributable to differences in the distributions of active saving rates conditional on socio-economic characteristics. When retirement assets are included, the racial but not the ethnic gap in total savings disappears. The results suggest that reducing disparities in income, education and pension savings would help to reduce wealth inequality.

Keywords: African Americans; Mexican Americans; saving rates; wealth inequality (search for similar items in EconPapers)
JEL-codes: D14 D31 E21 G11 J15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-mac
Date: 2018-01
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