Economics Seminar Series

John Jones, Federal Reserve Bank of Richmond.

John Jones, Federal Reserve Bank of Richmond

John Jones, Vice President of Microeconomic Analysis Federal Reserve Bank of Richmond

(with Kartik Athreya, Grey Gordon and Urvi Neelakantan)

Accounting for Black-White wealth gaps: Earnings, demographics and rates of return

What are the proximate drivers of the Black-White wealth gap? We address this question using a rich life-cycle model that incorporates careful empirical estimates of several potential factors: earnings and employment differences, portfolio composition and returns that vary with wealth and age, family dynamics, mortality gaps, and bequest motives. A prominent feature of our approach is that we study differences across the entire wealth distribution rather than focusing on a single summary statistic such as the median. Preliminary results suggest that earnings differences among the employed account for a significant fraction of the wealth gap in the top half of the distribution while employment differences play a large role at the bottom. The tendency of wealthier households to earn higher portfolio returns widens the gap at the middle and top of the wealth distribution.

DATE: Friday, October 13, 2023

TIME: 3:30-5:00 p.m.

LOCATION: Fronczak 444