Decomposing Lifetime-Earnings Differences between White, Black, and Hispanic Families
DOI:
https://doi.org/10.25071/1874-6322.40654Keywords:
lifetime earnings, racial disparities, inequality, decompositionAbstract
Lifetime earnings are an important indicator of well-being but remain under-studied in the context of racial and ethnic disparities. This article explores lifetime-earning disparities between White, Black, and Hispanic families using a measure of lifetime earnings developed by Jacobs et al. (2020 and 2022) for the Survey of Consumer Finances, alongside a two-stage re-centred function decomposition approach, to study factors that contribute to these disparities. We describe how the components of lifetime earnings such as annual earnings, number of working household members, and years of employment vary by race and ethnicity and find that human capital-related variables account for most of the lifetime earnings differences. Furthermore, we explore the contribution of business ownership and find its explanatory power increases at the top of the lifetime earnings distribution.
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