Understanding the Unequal Post-Great Recession Wealth Recovery for American Families

The B.E. Journal of Economic Analysis and Policy

Sisi Zhang, Shuaizhang Feng

Abstract

The wealth of US families had not returned to its prerecession level by 2013, six years after the onset of the Great Recession. This article provides a comprehensive analysis of this slow and uneven episode of wealth recovery, using family-level data from the Survey of Consumer Finances 1989-2013. Both descriptive results and regressions controlling for life cycle wealth accumulation show that families of color and less-educated families are falling behind in wealth recovery because their wealth portfolios are concentrated in housing, which has recovered very slowly. The decomposition results suggest that homeownership plays a significant role in explaining wealth disparity by race, ethnicity, and education at the mean and bottom of the wealth distribution. Understanding the uneven wealth recovery has important implications for redesigning asset-related policies and narrowing wealth gaps.

Keywords: Family wealth; Great Recession; Wealth disparity

JEL classification: D31; J15; E21

Read more: https://doi.org/10.1515/bejeap-2016-0229