The Intergenerational Effects of WW2 G.I. Bill Eligibility on White-Black Homeownership, Wealth, and Inheritance Disparities

• In Event: Beyond the Red Lines: New Directions in the Study of Housing Policy and Racial Inequality

Abstract

Historians have largely documented racist exclusion of African-American WW2 veterans from access to G.I. Bill homeownership programs. Such racist exclusion is associated with the growth of modern U.S. racial wealth disparities. While some researchers have attempted to quantify the impact of G.I. Bill African-American homeownership exclusion on racial wealth disparities, the role of inheritance as a mechanism for the intergenerational transfer of G.I. Bill racial wealth disparity is understudied. Using restricted data that links the 1940 U.S. Census to Panel Study of Income Dynamics (PSID) data and WW2 veteran status as a proxy for G.I. Bill eligibility, I causally estimate the effects of the G.I. Bill on intergenerational racial wealth gaps and homeownership outcomes with attention to the mediating effects of inheritance. Using a regression discontinuity design I find that WW2 veteran status is associated with increased homeownership rates for white and black WW2 veterans alike with larger increases for white WW2 veterans. While G.I. Bill eligibility increased white-black homeownership gaps for WW2 veterans, white-black homeownership gaps most significantly increase for the adult children of WW2 veterans. Additionally, the wealth of white adult children of WW2 veterans was 54 percent higher than the wealth of adult children of African-American WW2 veterans. While just one percent of adult children of African-American WW2 veterans received an inheritance from their parent, 60 percent of the adult children of white WW2 veterans received an inheritance. I conclude that the racial inheritance gap is a key mechanism that contributes to intergenerational racial wealth disparities and is a critical site for further research and inquiry.

Author

• Raheem Hanifa, Princeton University
  Presenting Author