Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020

The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we provide a new long-run series on white-to-Black per capita wealth ratios from 1860 to 2020, using data from the US Census, historical state tax records, and a newly harmonized version of the Survey of Consumer Finances (1949-2019), among other sources. We combine these data with a parsimonious framework of wealth accumulation by each racial group to show, given vastly unequal starting conditions under slavery, racial wealth convergence is an extremely distant scenario even if wealth-accumulating conditions were equal for the two groups post-Emancipation. Observed convergence has followed a slower path relative to this equal conditions benchmark, and today’s wealth gap is on track to diverge, rather than converge, due to rising wealth inequality. Our framework sheds light on the implications of policies like reparations, which address the historical origins of today’s gap, versus overall redistributive policies for the future evolution of the wealth gap. ∗We thank Sandy Darity, Damon Jones, Trevon Logan, Martha Olney, Fabian Pfeffer, David Romer, Emmanuel Saez, Bill Spriggs, Jón Steinsson, Alan Taylor, Gabriel Zucman, and members of the Economics of Racism and the UC Berkeley Economic History seminars for valuable feedback. We also thank all participants of the NBER Race and Stratification program meeting and the NBER Summer Institute Development of the American Economy program meeting. We thank Soumyajit Mazumder for generously sharing data for the state of Georgia. Isbah Bandeali, Santiago Deambrosi, Kendra Marcoux, Will McGrew, and Moritz Scheidenberger provided outstanding research assistance.