Thomas Masterson
Levy Economics Institute

What Progress Has Been Made in Alleviating Racial
Economic Inequality?   

We examine the evolution of racial economic inequality using the Levy Institute Measure of Economic Well-Being (LIMEW), a comprehensive household income measure that incorporates amount of wealth, taxes and transfers, spending on public goods, and the value of household production. Analyzing shifts in racial inequality for the between benchmark LIMEW years 1959, 1972, 1982, 1989, 2000, 2004 and 2007, we show that reductions in overall racial inequality in the 1960s were sustained through the 1980s, but that in the 1990s there was a marked increase driven by an increase in the concentration of wealth among white households. While spending on education and progressive tax policies helped alleviate racial disparities, transfers have had little impact on racial inequality. We also show that much of the racial inequality is driven by within race inequality as opposed to between race inequality.