Land and Racial Wealth Inequality

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American Economic Association


...Explanations for the persistent and large racial wealth gap largely fall into two categories. First, racially discriminatory policies in credit markets, labor markets, school finance, and other institutions may have inhibited the ability of blacks to earn income and accumulate wealth. And, second, the effect of such policies may have amplified the impact of an alternate source of the racial wealth gap—low initial levels of black wealth. During slavery, law and custom prevented most slaves from owning property or other assets. After the Thirteenth Amendment abolished slavery, emancipation grants of “forty acres and a mule” were proposed to remedy the freedmen’s lack of capital. They never came to fruition, thus ensuring that former slaves entered freedom with little to no wealth, lagging substantially behind whites.