Divergent trajectories and unequal returns: A temporal approach to Black-White wealth inequality in the United States

Abstract

Whereas the dynamic nature of racial wealth inequality in the United States has been long recognized, prior research has paid inadequate attention to the temporal process whereby inequality develops and evolves. In the present study, we propose a three-stage conceptual framework, wherein divergent wealth trajectories between African Americans and Whites are predetermined in social origins (stage one), cultivated while growing up (stage two), and materialize over time (stage three). Based on the Panel Study of Income Dynamics (PSID), we put this conceptualization to an empirical test, producing two major findings: (1) The sources of Black-White wealth inequality can be fully explained after account for these three temporal stages of wealth determinants; (2) African Americans are found to receive diminished returns to a range of wealth-enhancing attributes, particularly early ones that are shaped prior to the formation of independent households. Academic and policy implications are also discussed.