Assets, Earnings Mobility and the Black/White Gap

Abstract

Abstract This paper derives two testable propositions from the theoretical literature on the relation between wealth ownership and stratification processes with the aim of explaining the inequality of opportunities for earnings acquisition. The first proposition establishes a relation between wealth and earnings mobility. The second one provides an explanation of the black/white earnings mobility gap in terms of the wealth inequality among blacks and whites. The analyses in the paper provide support for both propositions. Assets are shown to be associated with the opportunities for earnings acquisition. Furthermore, on the basis of the estimated models, it can be concluded that the black/white earnings progression gap arises partly from the wealth inequality in assets ownership of blacks and whites.