Earnings, Not Inheritance, Drives Most of Racial Wealth Gap, Study Says

Earnings were much more of a factor than inheritance and gifts

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Drazen Zigic/Getty Images

When it comes to explaining why White Americans control a disproportionate amount of wealth, a new study shows, perhaps surprisingly, that inheritance plays little role. 

Researchers at the Federal Reserve Bank of Boston calculated that inheritance explained just 13% of the racial wealth gap between White and Black households, and 14% of the gap between White and Hispanic households. 

Other factors, especially lifetime earnings, and what researchers categorized as “human capital” including pensions, union membership and education, were much more important. 

One reason: "Most people, regardless of race, receive no inheritance or other transfer of substantial value,” the report said. “In addition, most recipients of inheritances ultimately consume those bequests and do not plan to leave substantial gifts to their offspring.”

Granted, White people typically get more than other groups when there is generational wealth to hand down. Whites inherit more than five times as much as Black people and six times as much as Hispanic people, according to a 2021 analysis by the researchers at the University of Pennsylvania.

Wealth gaps remain large despite calls to improve inequality. In 2019, a typical White household had a net worth of $188,200, compared with $24,100 for Black and $36,100 for Hispanic ones.

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  1. Boston Fed. "Racial Wealth Disparities: Reconsidering the Roles of Human Capital and Inheritance."

  2. Penn Wharton. "Inheritances by race."

  3. Federal Reserve. "Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances."

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