TY  - JOUR
AU  - Altonji,Joseph G.
AU  - Doraszelski,Ulrich
TI  - The Role of Permanent Income and Demographics in Black/White Differences in Wealth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8473
PY  - 2001
Y2  - September 2001
UR  - http://www.nber.org/papers/w8473
L1  - http://www.nber.org/papers/w8473.pdf
N1  - Author contact info:
Joseph G. Altonji
Department of Economics
Yale University
Box 208264
New Haven, CT  06520-8264
Tel: 203/432-6285
Fax: 203/432-5591
E-Mail: joseph.altonji@yale.edu

Ulrich Doraszelski
Wharton School
University of Pennsylvania
1405 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6372
Tel: (215) 898-7148 
Fax: (215) 898-7635
E-Mail: doraszelski@wharton.upenn.edu
AB  - We explore the extent to which the huge race gap in wealth can be explained with properly constructed income and demographic variables.  In some instances we explain the entire wealth gap with income and demographics provided that we estimate the wealth model on a sample of whites.  However, we typically explain a much smaller fraction when we estimate the wealth model on a black sample.  Using sibling comparisons to control for intergenerational transfers and the effects of adverse history, we find that differences in income and demographics are not likely to account for the lower explanatory power of the black wealth models.  Our analysis of growth models of wealth suggests that differences in savings behavior and/or rates of return play an important role.
ER  -