Black-White Differences in Income and Wealth
This paper presents results from an unusual microdata set assembled by the authors and researchers at the Social Security Administration. The data set pools information from three sources: death certificates for residents of Washington, D.C. dying in 1967; Washington, D.C. estate tax returns; and Social Security earnings records. Under an arrangement worked out by Smith with the city of Washington and the National Center for Health Statistics, all (about 2,500) estate tax returns for 1967 decedents were matched with their death certificates. The match provided information on age, sex, race, place of birth, marital status, cause of death and assets and liabilities. Washington, D.C. has its own estate tax, which unlike the federal estate tax, starts at a very low ($1,000) filing level. A full description of this part of the data base and an estate multiplier estimate of the distribution of wealth in Washington, D.C. has been published elsewhere (Smith). This year, thanks to our colleagues, Frederick Scheuren and Wendy Alvey of the Social Security Administration, a procedure was worked out which permitted us to turn over to them our files and to obtain from them analytical results from matched records from our files and their records of covered earnings under the Social Security Act. The intended use of this data base is to estimate a lifetime savings model with earnings as a key determinant. We still may be able to do so, but the prospects look rather grim. In the spirit that science is advanced by knowing what doesn't work as well as wuiat does, we present below a few initial findings which show some promise and of a lot of statistical husbandry which bore little fruit. We shall proceed by first looking at differences in the levels of covered income reported by black and white workers, then at the wealth levels of blacks and whites, and finally at an attempt to predict the wealth of black and white workers using demographic variables and earnings records.
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