A study of consumption decisions and wealth, individual data, political economy and theory

James CURTIS Jr

Abstract


Abstract. Recent studies have used regression decomposition to analyze recent data and found that over seventy percent of the black-white wealth differences remained unexplained (See, e.g., Gittleman & Wolff 2000; Altonji, Doraszelski & Segal 2000; and Blau & Graham 1990). Their results are limited to the variation in modern data. This study contributes improved methodology and historical empirical results to the literature on economic discrimination. In this paper, (i) presents structural regression decompositions, which are modifications to methods developed by Becker (1957) and Oaxaca (1973); (ii) presents a basic empirical test when analyzing structural regression decompositions; (iii) reports the estimated sources of black-white differences in wealth directly before and after emancipation; (iv) links these findings to recent studies. Empirical estimates confirm that the size and persistence of modern black-white wealth differences have historical roots. (v) presents decision-making considerations of “individuals” in an economy with grouped individuals, owners of firms, and social planner(s), conditional on wealth constraints with applied social economic considerations.

Keywords. Theory of economic discrimination, Structural regression decomposition, Wealth inequality.

JEL. J70, D90, E20, C20, H50, N30.

Keywords


Theory of economic discrimination; Structural regression decomposition; Wealth inequality.

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References


Altonji, J.G., Doraszelski, U., & Segal, L. (2000). Black/White differences in wealth, Federal Reserve Bureau of Chicago Economic Perspectives, 24(1), 38-50.

Becker, G.S. (1957), The Economics of Discrimination, Chicago: University of Chicago Press.

Blau, F., & Graham, J. (1990). Black-White differences in wealth and asset composition, Quarterly Journal of Economics, 105(2), 321-339. doi. 10.2307/2937789

Gittleman, M., & Wolff, E.N. (2000). Racial wealth disparities: Is the gap closing, Social Science Research Network Working Paper, No.311. [Retrieved from].

Oaxaca, R. (1973). Male-female wage differentials in urban labor markets, International Economic Review, 14(3), 693-709. doi. 10.2307/2525981




DOI: http://dx.doi.org/10.1453/jel.v5i1.1579

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