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United States Wealth Inequality Over the 20th Century

Paper Session

Saturday, Jan. 4, 2025 2:30 PM - 4:30 PM (PST)

Parc 55, Cyril Magnin 1
Hosted By: American Economic Association
  • Chair: Katherine Eriksson, University of California-Davis

Changes in the Distribution of Black and White Wealth since the U.S. Civil War

Ellora Derenoncourt
,
Princeton University
Chi Hyun Kim
,
University of Bonn
Moritz Kuhn
,
University of Mannheim

Abstract

Historically a region of extreme Black-white wealth disparities in the aftermath of slavery and Jim Crow, the U.S. South witnessed dramatic racial wealth convergence during the late 19th and 20th centuries. Today, wealth outcomes for Black Americans are, if anything, slightly better in the South than in the rest of the U.S. In this project, we trace out the shifting role of the South in racial wealth disparities, from 1860-2020, focusing on the role of historical wealth portfolios and regional income dynamics for Black and white Americans. To do so, we combine novel data from historical tax records, census data, as well as detailed survey micro data from the Survey of Consumer Finances and other sources to document patterns and determinants of Black and white wealth accumulation by geography and over time.

The Gilded Age and Beyond: Persistence of Elite Wealth in American History

Zachary Ward
,
Baylor University
Priti Kalsi
,
Rochester Institute of Technology

Abstract

Is the top tail of wealth a set of fixed household or is there substantial turnover? We estimate upper-tail dynamics during the Gilded Age and beyond, an era of rapid wealth accumulation and concentration in the 19th and early 20th centuries. Using various wealth proxies and data that tracks millions of individuals, we find that the overwhelming majority of incumbent households fall out of the top tail across generations and even within their own lifetime. However, elite wealth still matters as starting out in the upper tail substantially increases the odds of ending there. Finally, we document a significant non-linearity in the grandfather-grandchild rank-rank association for wealth, where convergence to the mean was much slower for the top percentiles than for the rest of the distribution.

Black Migration and the Rise of Jim Crow

Omer Ali
,
University of Pittsburgh
Lukas Althoff
,
Stanford University
Hugo Reichardt
,
Pompeu Fabra University

Abstract

Following the end of the US Civil War, as states moved from slavery to wage labor, a new set of extractive institutions emerged in the US South, collectively known as Jim Crow.
We show that Black migration within the South, by increasing the local Black workforce and lowering wages, benefited white elites but would have disadvantaged white wage-earners. In response, elites enacted segregationist laws to preserve white political loyalty and confer tangible benefits to white labor. Using data on migration, electoral outcomes, and Jim Crow legislation, we find that counties receiving more Black migrants saw larger increases in Democratic vote shares and the passage of Jim Crow laws, but not more racial violence. These counties also saw economic benefits for incumbent whites across the wealth distribution, while the economic outcomes of incumbent Black residents were hurt.

Black Gold: The Effect of Wealth on Descendants of the Enslaved

Micah Villarreal
,
University of California-Santa Barbara

Abstract

Can temporary windfalls narrow racial wealth disparities? Can they address other racial inequalities? In this project, I leverage quasi-random oil discoveries on Black-owned land in the early 1900s to study how large positive wealth shocks may have affected Black economic progress in the short and long-term. In preliminary work, I find that wealth has a positive effect on the human capital of the first generation. Landholders who find oil are more geographically mobile and select into higher status occupations. Work on longer-term outcomes, including intergenerational outcomes, is still in progress.

Discussant(s)
Rucker Johnson
,
University of California-Berkeley and NBER
Jeff Larrimore
,
Federal Reserve Board
Santiago Pérez
,
University of California-Davis
Joseph P. Ferrie
,
Northwestern University
JEL Classifications
  • N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
  • D3 - Distribution