Three Papers on the Black-White Mobility Gap in the United States

• Main Author: Fox, Liana
• Language: English
• Published: 2013
• Subjects: Families; Public policy (Law); Labor economics
• Online Access: https://doi.org/10.7916/D8QF9136

Paper 1: Missing at Random? An Analysis of the Effect of Sample Selection on Intergenerational Earnings Elasticities by Race Utilizing the Panel Study of Income Dynamics, I assess the effect of sample selection bias on estimates of intergenerational earnings elasticities for white and black father-son pairs, regressing log child earnings on log parent earnings. Estimating four increasingly less selected models, I assess the robustness of estimates to alternative methods of handling sons who are missing data due to periods of unemployment or part-time employment. The results indicate that the assumption of exogenous selection into full-time employment significantly biases the estimates for blacks, although it does not have a large impact on estimates for whites. As a consequence, selection bias will understate the magnitude of the black-white mobility gap. The results also indicate that two methods substantially mitigate this selection bias: having a long panel, or imputing data in a short panel. Paper 2: Measuring the Black-White Mobility Gap: A Comparison of Datasets and Methods Chapter 3 utilizes both the National Longitudinal Survey of Youth (NLSY) and the Panel Study of Income Dynamics (PSID) to analyze the magnitude and nature of black-white gaps in intergenerational earnings and income mobility in the United States. This chapter finds that relying on different datasets or measures will lead to different conclusions about the relative magnitudes of black versus white elasticities and correlations, but using directional mobility matrices consistently reveals a sizable mobility gap between black and white families, with low-income black families disproportionately trapped at the bottom of the income distribution and more advantaged black children more likely to lose that advantage in adulthood than similarly situated white children. I find the family income analyses to be most consistent and estimate the upward mobility gap as between 19.1 and 20.3 percentage points and the downward gap between -20.9 and -21.0. Additionally, I find that racial disparities are much greater among sons than daughters and that incarceration and being raised in a female-headed household have much larger impacts on the mobility prospects of blacks than whites. Paper 3: Can Parental Wealth Explain the Black-White Mobility Gap? Utilizing longitudinal data from the Panel Study of Income Dynamics (PSID), this chapter examines the relationship between parental wealth and intergenerational income mobility for black and white families. I find that total parental wealth promotes upward mobility for low-income white families, but does not protect against downward mobility for white families from the top half of the income distribution. Conversely, I find that total parental wealth does not assist low-income black families while home ownership may have negative associations with the likelihood of upward mobility for these families. However, for black families from the top half of the income distribution home equity is protective against downward mobility suggesting a heterogeneous relationship between home ownership and mobility for black families.