No abstract

Alternative financial services (AFS) such as check cashing and payday loans may help unbanked households meet transaction and credit needs, yet often at a very high price. Saving tax refunds can help low‐ and moderate‐income (LMI) households build emergency savings as a way to reduce dependence on AFS and cope effectively with irregular cash flows and financial shocks. This study examined the impact on AFS use of message‐based interventions encouraging LMI households to save their refunds when they electronically filed their federal income tax returns. We found that 3 out of 18 interventions resulted in statistically significant reductions in credit‐related AFS use with small effect sizes. None of the interventions resulted in reduced transaction‐related AFS use. Other factors—especially prior AFS use and financial shocks—were strong predictors of AFS. Financially vulnerable households may need additional opportunities and protections to reduce dependence on AFS.

To explain racially differential housing outcomes, previous studies tend to concentrate on discriminatory processes within the mortgage market while ignoring the home-owning family's broad socioeconomic challenges. This study proposes a conceptual framework for understanding Black-White inequality in homeownership sustainability, which emphasizes Black homeowners' socioeconomic challenges that are external to mortgage-market evaluations, with a particular focus on the mediating role of liquid assets. Based on the Panel Study of Income Dynamics (PSID), the framework is put to an empirical test on the differential exit rates between Black and White homeowners during the recent housing crisis. The findings indicate that (1) the racial gap in homeownership exit is eliminated after liquid wealth is controlled in the model alongside other covariates and (2) the inclusion of liquid wealth renders all mortgage-oriented variables nonsignificant with regard to their explanatory power for Black-White inequality in exit rates. Policy implications of the findings are also discussed.

The present study conceptualizes earnings inequality between black and white men as a three-stage dynamic process: the pre-market human capital acquisition, the labor-market entry, and the longitudinal career progression. Based on the Panel Study of Income Dynamics (PSID), this framework is put to an empirical test that leads to two major conclusions. First, overall patterns of black-white earnings inequality are shaped primarily at labor-market entry as opposed to developing within the labor market. Second, the longitudinal progression of earnings inequality exhibits distinctive trajectories across different pre-market groups. Less-educated black men face a wider earnings gap at labor-market entry, but the gap stays relatively stable over time. Highly educated black men face a narrower earnings gap at labor-market entry, but the gap widens over time. I attribute these patterns to the temporal-specific interplays between race and a series of labor-market mechanisms.