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Economy

What Drives the Black-White Wealth Gap?

A new paper debunks various myths about the wealth gap between blacks and whites in the United States, and the methods for bridging it.
Hamson McPherson, 77, who was denied a home loan modification request by his bank after the foreclosure crisis, stands outside his house in 2011.
Hamson McPherson, 77, who was denied a home loan modification request by his bank after the foreclosure crisis, stands outside his house in 2011. Andrew Burton/Reuters

The wealth gap between blacks and whites would take 225 years to disappear, according to one recent, rather optimistic, estimate. As to how this could happen, theories abound.

Squeezing shut the homeownership gap is a popular solution, and understandably so. A century of racist housing policy—redlining, mortgage loan discrimination, preferential housing subsidies—has created major barriers to homeownership for black Americans. Simultaneously, the federal government has long promoted homeownership as one of the primary asset building mechanisms in the U.S. The result: A homeownership gap that largely overlaps with the wealth gap. But will eliminating the former also do away with the latter?