The Physics of Reparations: A Quantum Leap in Equity
This project will explore whether reparations can close and have a lasting impact on the racial wealth gap. The research team will examine how parental income, wealth, and education affect offspring’s wealth as adults. Using the Panel Study of Income Dynamics, they estimate an empirical model of the relationship between parents’ and children’s income, wealth, and education. They will then develop a general equilibrium model with endogenous accumulation of physical and human capital by heterogeneous households. Built into the model is an overlapping generations structure, whereby investments in children depend on parents’ income and wealth, and wealth can be inherited across generations. They will then use the model to examine the effect of different reparations policies and their effects on short- and long-run welfare, income, and human capital by race.