Black Wealth/White Wealth: A New Perspective on Racial Inequality.

• Author: Margo, Robert A.

Few policy problems are as explosive or persistent as racial inequality. Fewer still have been studied so intensively. The bulk of the work by economists has focused narrowly on earnings. It is known, for example, that the black-white earnings ratio is higher today than in 1940; that much of the increase took place during the 1940s and in the late 1960s and early 1970s; and that recent increases in wage inequality have slowed the pace of racial convergence. Long-term narrowing of racial differences in the quantity and quality of schooling helped to raise the earnings ratio, although the quantitative significance of racial convergence in schooling is disputed. Also disputed are the effects of federal antidiscrimination legislation.

Although more work on racial differences in earnings can (and will) be done, the marginal social product of studying other forms of racial inequality is certainly very high. On grounds of topic alone, Black Wealth/White Wealth is a welcome volume. The core idea is to shift scholarly attention toward racial differences in wealth, because by comparison with earnings, there has been relatively little analysis of wealth. For some readers, this scholarly neglect will seem odd, as racial differences in wealth are several orders of magnitude larger than the differences in earnings. Measured in terms of earnings, a black middle class has emerged since World War II, but the nonhuman means of production are largely beyond its grasp.

Black Wealth/White Wealth is divided into an introduction, seven substantive chapters, and two appendices. Chapter 1 reviews some of the relevant economic history and argues that wealth is a more important indicator of economic status than current income because wealth "brings... power and independence" (p. 32). Chapter 2 reviews various institutional impediments to black wealth accumulation--what Oliver and Shapiro call the "racialization of state policy"--highlighting the historical roles of de jure segregation, the Federal Housing Administration, and the tax code, among other factors. Chapter 3 introduces the SIPP (Survey of Income and Program Participation) database on which Oliver and Shapiro rely and also discusses conceptual problems in the measurement of wealth. Drawing on SIPP data for the late 1980s, chapter 4 presents some basic evidence of wealth inequality in contemporary America, including the unsettling finding (p. 86) that the black-white ratio of median wealth is only 0.08 (8...