The Dynamics of the Racial Wealth Gap
Daniel Carroll and
Eric Young ()
No 19-18R, Working Papers from Federal Reserve Bank of Cleveland
What drives the dynamics of the racial wealth gap? We answer this question using a dynamic stochastic general equilibrium heterogeneous-agents model. Our calibrated model endogenously produces a racial wealth gap matching that observed in recent decades along with key features of the current cross-sectional distribution of wealth, earnings, intergenerational transfers, and race. Our model predicts that equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap. One-time wealth transfers have only transitory effects unless they address the racial earnings gap, and return gaps only matter when earnings inequality is reduced.
Keywords: Wealth Dynamics; Racial Inequality (search for similar items in EconPapers)
JEL-codes: D31 D58 E21 E24 J7 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2019-10-08, Revised 2022-11-29
New Economics Papers: this item is included in nep-dge, nep-lma, nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
https://doi.org/10.26509/frbc-wp-201918r Full text (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:191800
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Papers from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().