Economic Sociology & Theoretical Differences in Wealth

Foremost, a theory of relative wealth is presented, where wealth is determined by group-specific wages, hours of work, consumption, and interest rates. Historical black-white differences in wealth were estimated using regression decomposition. This technique decomposes economic differences into the portion explained by differences in characteristics and the unexplained portion due to different returns to a set of characteristics (See, eg, Blinder 1973 and Oaxaca 1973). Results confirm that we cannot reject that the claim that, when comparing the wealth of ex-slaves to the wealth whites, differences in wealth due to unexplained (or discrimination) effects dominate the portion due to classical characteristic differences.