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Modeling Reparations

Paper Session

Saturday, Jan. 8, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: National Economic Association
  • Chair: Samuel L. Myers Jr., University of Minnesota

Accounting for Racial Wealth Disparities and Reparation Policies in the U.S.

Illenin Kondo
,
Federal Reserve Bank of Minneapolis
Teegawende H. Zeida
,
Brock University
William A. Darity Jr.
,
Duke University
Samuel L. Myers Jr.
,
University of Minnesota

Abstract

While there is a large empirical literature on ongoing racial discrimination and persistent socio-economic disparities between Black and White households, far fewer contributions evaluate these disparities in the macroeconomics literature. We decompose the determinants of historically persistent and large racial wealth differences in the U.S. since 1950 through the lens of a standard heterogeneous-agents model that allows for group-based privileges or exclusions as wedges. We find that a wedge akin to wealth destruction risk for Black households is essential for generating the persistent and large racial wealth divide. We discuss the implications of these findings for modeling racial wealth disparities and reparations policies.

The One Thing Needful: Free Land and Black Mobility, 1880-1900

Melinda C. Miller
,
Virginia Polytechnic Institute and State University

Abstract

Unlike southern freedmen, former slaves in the Cherokee Nation had the opportunity to claim free land after they were emancipated. In previous work, I have found that their access to free land was associated with higher levels of average income and wealth than that of southern freedmen and lower levels of racial inequality than in the postbellum South. In this paper, I looked more closely at a linked sample of three cohorts of Cherokee freedmen families to examine the extent to which individuals and their descendants were able to maintain high levels of income and wealth. I also examine potential mechanisms by which the economic success of Cherokee freedmen in 1880 could be transmitted to their children and grandchildren. I find remarkable persistence in economic status of those who were adults in both 1880 and 1900. Additionally, I find that the next generation of Cherokee freedmen largely exhibited the ability to either maintain or improve their social status vis-a-vis their parents. Evidence suggests that one mechanism through which parental income and wealth was transmitted across generations was related to human capital acquisition. The children and grandchild of freedmen in the upper income quartile in 1800 were more likely to be literate or attend school than the children and grandchildren of freedmen in the lower income quartile.

Reparations and the Right To Return

Deborah N. Archer
,
New York University

Abstract

American slavery was a system of theft – theft of life, of human dignity, of family, of safety, of identity, of property, and of home. After the abolition of slavery, that theft continued through Jim Crow and state-sponsored racial terror. As Black families acquired land and other property despite that institutionalized terror, they commonly had their property stolen. One result of this legacy of theft is America’s profound racial segregation and wealth inequality. As America responds to the renewed momentum in the fight for Black reparations, the country must grapple with how to address the full legacy of the land theft and displacement born from slavery. The right to return has long been used internationally as a legal and conceptual framework to protect ethnic minorities who were the victims of ethnic cleansing. It is a demand for people who have been displaced from their country, community, or home to return with safety, dignity, and support. This essay explores how the right to return framework can be used to advance reparations for slavery, Jim Crow, and the decades of racial violence that forced Black people out of their homes, businesses, and communities. Reparations grounded in this right would acknowledge the centuries of harm to Black people who were driven from their homes through America’s ethnic cleansing and endeavor to bring those people, their descendants, and members of the community home, assist them in rebuilding their lives, or compensate them for their loss.

Parental Wealth and Educational Attainment

Audrieanna T. Burgin
,
Zearn

Abstract

Previous research has analyzed the impact of parental wealth on the educational attainment of young adults. This analysis furthers current research by analyzing whether educational attainment varies based on the level of parental wealth at different points in childhood. Thus, the analysis estimates the impact of parental wealth on educational attainment in the presence of youth cycles. The analysis checks for robustness by subsequently estimating the linear regression model using a box-cox transformation of the dependent variable, ordered logistic regression, and probit estimations. The data are compiled from the Panel Study of Income Dynamics (PSID), a well-known dataset. This analysis updates the current literature with the use of biennial data from 1999-2017. The analysis finds that parental wealth is positively correlated with educational attainment. When analyzed across youth cycles, parental wealth has the strongest impact on the youth cycle of ages 0-5, which are the early childhood education years of the individual.

Parental Wealth, Personality Traits, Immigrant Status, and Educational Attainment

Ketsia S. Dimanche
,
Oklahoma Tax Commission

Abstract

Previous research have shown that there are generational differences in economic outcomes of immigrants. Often, these differences are explained by differences in cognitive and noncognitive skills. This paper examines the role of parental wealth in mitigating the effect of immigrant status and behavioral traits on education attainment. I find that parental wealth is a significant factor determining education attainment. More importantly, wealth is a moderating factor for the effect of race on education. While controlling for wealth and behavioral traits, self-identification as Asian and Black has a positive effect on educational attainment.

Discussant(s)
Illenin Kondo
,
Federal Reserve Bank of Minneapolis
Deborah N. Archer
,
New York University
Melinda C. Miller
,
Virginia Polytechnic Institute and State University
Kwabena Gyimah-Brempong
,
National Science Foundation
Neepa Gaekwad Babulal
,
State University of New York-Freedonia
JEL Classifications
  • J1 - Demographic Economics
  • N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy