Kin Effects on Black‐White Account and Home Ownership

Abstract

This article combines the literature on kin networks and racial disparities in asset ownership. Specifically, we examine the effects of kin characteristics—sibling poverty and parental poverty, education, and occupation—on financial account ownership and home ownership. We find that kin matter for these outcomes. Having a poor sibling and coming from a poor family are negatively associated with account and home ownership while mother’s education has a positive effect. Separate analyses by race suggest that kin characteristics matter for both Blacks and Whites for account ownership, but for home ownership they are significant for Whites only. Racial differences in kin characteristics account for over half of the racial gap in account ownership, but are not important for understanding the racial gap in home ownership. The significant effects of extended family characteristics on socioeconomic well‐being make a case for the inclusion of kin variables in the growing literature on wealth disparities among Blacks and Whites.

Financial Shocks, Liquid Assets, and Material Hardship in Low- and Moderate-Income Households: Differences by Race

“…Also, black households receive less and give more financial support to their extended families (Goldscheider and Goldscheider 1991), provide more informal financial assistance (O'Brien 2012), and are more likely to have poor family members (Heflin and Pattillo 2002). Therefore, the strain on liquid financial assets may be greater among black households.…”

Escaping Poverty and Securing Middle Class Status: How Race and Socioeconomic Status Shape Mobility Prospects for African Americans During the Transition to Adulthood

“…Disparities in homeownership also help perpetuate class-based and racial inequalities in wealth. For individuals in their twenties and thirties, having grown up poor is negatively related to home and account ownership (i.e., savings or checking accounts, money market funds, or savings bonds) (Heflin & Pattillo, 2002). Not only do Whites own more homes than Blacks, but the median value of the home and home equity are less for Black homeowners.…”

Can ‘Baby Bonds’ Eliminate the Racial Wealth Gap in Putative Post-Racial America?

“…More recently, Gittleman and Wolff (2004) also found blacks have a slight savings rate edge over whites, again after adjusting for household income. Furthermore, the mild black savings rate advantage at most income levels is actually indicative of even greater black frugality because blacks who attain higher incomes typically have a greater array of kin and family obligations in assisting low-income relatives than whites, further reducing their resources to save (Chiteji and Hamilton 2002;and Heflin and Pattillo 2000).…”