Whatever Whites Had When Slavery Ended Is What They Have Now And Whatever Blacks Had Is What They Have

Black–white wealth inequality is much greater than black–white earnings inequality in the United States. The existing empirical literature has not been able to fully explain the wealth gap. This paper investigates how much of current black–white income and wealth inequality can be explained by initial conditions at Emancipation and nearly 100 years of segregated schools. A two-sector model with group-specific human capital accumulation and school expenditure differences can explain the path of black–white convergence in earnings over the past 130 years. The model also reproduces the fact that black–white wealth ratios remain much lower than black–white earnings ratios.