Understanding the Unequal Post-Great Recession Wealth Recovery for American Families

  • 1 Jinan University, Institute for Economic and Social Research, Guangzhou, China
  • 2 Jinan University, Institute for Economic and Social Research, Guangzhou, China
Sisi Zhang and Shuaizhang Feng

Abstract

The wealth of US families had not returned to its prerecession level by 2013, six years after the onset of the Great Recession. This article provides a comprehensive analysis of this slow and uneven episode of wealth recovery, using family-level data from the Survey of Consumer Finances 1989–2013. Both descriptive results and regressions controlling for life cycle wealth accumulation show that families of color and less-educated families are falling behind in wealth recovery because their wealth portfolios are concentrated in housing, which has recovered very slowly. The decomposition results suggest that homeownership plays a significant role in explaining wealth disparity by race, ethnicity, and education at the mean and bottom of the wealth distribution. Understanding the uneven wealth recovery has important implications for redesigning asset-related policies and narrowing wealth gaps.

  • Altonji, J. G., and U. Doraszelski. 2005. “The Role of Permanent Income and Demographics in Black/White Differences in Wealth.” Journal of Human Resources 40 (1):1–30.

  • Barsky, R., J. Bound, K. K. Charles, and J. P. Lupton. 2002. “Accounting for the Black-White Wealth Gap: A Nonparametric Approach.” Journal of the American Statistical Association 97:663–673.

    • Crossref
    • Export Citation
  • Blinder, A. S. 1973. “Wage Discrimination: Reduced Form and Structural Estimates.” The Journal of Human Resources 8:436–455.

    • Crossref
    • Export Citation
  • Bricker, J., L. J. Dettling, A. Henriques, J. W. Hsu, K. B. Moore, J. Sabelhaus, J. Thompson, and R. A. Windle. 2014. “Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances.” Federal Reserve Bulletin 100 (4): 1–41.

  • Bricker, J., A. B. Kennickell, K. B. Moore, and J. Sabelhaus. 2012. “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances.” Federal Reserve Bulletin 98 (2): 1–80.

  • Burd-Sharps, S., and R. Rasch. June 2015. Impact of the US Housing Crisis on the Racial Wealth Gap across Generations. New York: Social Science Research Council.

  • Choi, L. 2013. “Household Net Worth and Asset Ownership among the Economically Vulnerable.” Community Development research brief, Federal Reserve Bank of San Francisco.

  • Cotton, J. 1988. “On the Decomposition of Wage Differentials.” The Review of Economics and Statistics 70:236–243.

    • Crossref
    • Export Citation
  • DiNardo, J., N. Fortin, and T. Lemieux. 1996. “Labor Market Institutions and the Distribution of Wages, 1973–1993: A Semi-Parametric Approach.” Econometrica 64:1001–1044.

  • DiNardo, J., and T. Lemieux. 1997. “Diverging Male Inequality in the United States and Canada, 1981–1988: Do Institutions Explain the Difference?.” Industrial and Labor Relations Review 50:629–651.

  • Dunn, L., and R. Olsen. 2014. “US Family Real Net Worth through the Great Recession and Beyond: Have We Recovered?.” Economic Letters 122:272–275.

    • Crossref
    • Export Citation
  • Firpo, S., N. M. Fortin, and T. Lemieux. 2009. “Unconditional Quantile Regressions.” Econometrica 77 (3):953–973.

    • Crossref
    • Export Citation
  • Fry, R., and P. Taylor. 2013. “An Uneven Recovery, 2009–2011.” Pew Research Center policy report.

  • Gale, G. W., and K. M. Pence. 2006. “Are Successive Generations Getting Wealthier, and if So, Why? Evidence from the 1990s.” Brookings Papers on Economic Activity 2006 (1):155–213.

    • Crossref
    • Export Citation
  • Gathergood, J. 2011 . “Racial Disparities in Credit Constraints in the Great Recession: Evidence from the UK.” The B.E. Journal of Economic Analysis and Policy 11 (1): . DOI: .

    • Crossref
    • Export Citation
  • Gustman, A. L., T. L. Steinmeier, and N. Tabatabai. 2014. “The Great Recession, Decline, and Rebound in Household Wealth for the Near-Retirement Population.” The Journal of Retirement 2 (2):27–44.

    • Crossref
    • Export Citation
  • Hryshko, D., M. Luengo-Prado, and B. E. Sorensen. 2012. “The Effect of Education on Equity Holdings.” The BE Journal of Economic Analysis & Policy 12 (1):. DOI: .

    • Crossref
    • Export Citation
  • Juster, F. T., J. P. Smith, and F. Stafford. 1999. “The Measurement and Structure of Household Wealth.” Labour Economics 6 (2):253–275.

    • Crossref
    • Export Citation
  • McKernan, S. M., C. Ratcliffe, E. Steuerle, and S. Zhang. 2014. “Disparities in Wealth Accumulation and Loss from the Great Recession and Beyond.” The American Economic Review 104 (5):240–244.

    • Crossref
    • Export Citation
  • Menchik, P. L., and N. A. Jianakoplos. 1997. “Black-White Wealth Inequality: Is Inheritance the Reason?.” Economic Inquiry 35:428–442.

    • Crossref
    • Export Citation
  • Neumark, D. 1988. “Employers’ Discriminatory Behavior and the Estimation of Wage Discrimination.” The Journal of Human Resources 23:279–295.

    • Crossref
    • Export Citation
  • Oaxaca, R. 1973. “Male-Female Wage Differentials in Urban Labor Markets.” International Economic Review 14:693–709.

    • Crossref
    • Export Citation
  • Pence, K. M. 2006. “The Role of Wealth Transformations: An Application to Estimating the Effect of Tax Incentives on Saving.” The B.E. Journals in Economic Analysis and Policy: Contributions to Economic Analysis and Policy 5 (2):1–24.

  • Pfeffer, F. T., S. Danziger, and R. F. Schoeni. 2013. “Wealth Disparities before and after the Great Recession.” The ANNALS of the American Academy of Political and Social Science 650 (1):98–123.

    • Crossref
    • PubMed
    • Export Citation
  • Pfeffer, F. T., R. F. Schoeni, and P. Andreski. 2013. “A Comparison of Wealth Estimates Based on the 2007 Panel Study of Income Dynamics and the 2007 Survey of Consumer Finances.” PSID Technical Paper.

  • Reimers, C. W. 1983. “Labor Market Discrimination against Hispanic and Black Men.” The Review of Economics and Statistics 65:570–579.

    • Crossref
    • Export Citation
  • Scholz, J. K., and K. Levine. 2004. “U.S. Black-White Wealth Inequality.” In Social Inequality, edited by K. Neckerman, 895–929. New York: Russell Sage Foundation.

  • Shapiro, T., T. Meschede, and S. Osoro. 2013. The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide. Waltham, MA: Institute on Assets and Social Policy, Brandeis University.

  • Taylor, P., R. Kochhar, R. Fry, G. Velasco, and S. Motel. 2011. Wealth Gaps Rise to Record Highs between Whites, Blacks and Hispanics. Washington, DC: Pew Research Center.

  • Thompson, J. P., and G. A. Suarez. 2015. Exploring the Racial Wealth Gap Using the Survey of Consumer Finances. Washington: Board of Governors of the Federal Reserve System.

  • Wolff, E. N. 2012. “The Asset Price Meltdown and the Wealth of the Middle Class.” National Bureau of Economic Research Working Paper 18559.

  • Wolff, E. N. 2015. “US Pensions in the 2000s: The Lost Decade?” Review of Income and Wealth 61 (4):599–629.

    • Crossref
    • Export Citation
Purchase article
Get instant unlimited access to the article.
$42.00
Log in
Already have access? Please log in.


or
Log in with your institution

Journal + Issues

The B.E. Journal of Economic Analysis & Policy (BEJEAP) is an international forum for scholarship that employs microeconomics to analyze issues in business, consumer behavior and public policy. Topics include the interaction of firms, the functioning of markets, the effects of domestic and international policy and the design of organizations and institutions.

Search