Depleting Capital? Race, Wealth and Informal Financial Assistance

Recent work suggests that part of the racial gap in wealth is explained by racial differences in network poverty. In this article, data from the 2007 Survey of Consumer Finances and the 2005 and 2007 Panel Study of Income Dynamics (PSID) are used to demonstrate that middle- and upper-income blacks are more likely to provide informal financial assistance than their white counterparts. Further, a lagged model using the PSID finds that this difference in financial assistance can account for part of the racial gap in wealth. An empirically useful definition of negative social capital is developed to illustrate how obligations of group membership can have stratifying consequences for individuals.