BLACK-WHITE WEALTH INEQUALITY - IS INHERITANCE THE REASON

Racial differences in the receipt of financial inheritances help to ex plain why the average difference in wealth between black and white hou seholds is larger than the average difference in income. Using data fr om a panel of prime-aged males and from a representative survey of the U.S. population, we document the greater likelihood of white househol ds receiving an inheritance than black households. Controlling for oth er factors which contribute to racial differences in wealth, we estima te that financial inheritances may account for between 10% and 20% of the average difference in black-white household wealth.