Estimating racial differences in income dynamics from aggregate data.

In this paper aggregate data are used to derive transition probability matrices for both black and white families. These describe the probability that a family in one income class will move to another in a single year. The average time for a family to move from one income class to another is then calculated from the probability estimates. The results indicate that, in addition to having a greater proportion of families in the lowest income classes, black families have a relative disadvantage in their chances of advancing to a higher income class. In particular, Iow-income black families have a smaller probability than whites of increasing their income, while middle- and high-income black families have a greater chance of a decline in income. The results indicate that the distribution of income for black families does not merely lag behind that of white families. Rather, it would appear that, ceteris paribus, the existing disparities will become even greater.
The results also show that the proportion of families in the lowest income class is steadily declining for both races, although the estimated average time for either a black or white family to escape from the under-$3000 level is very long. The average black family with income below $3000 can expect to spend twenty-one years at this income level before rising to a higher level, while a similarly situated white family can expect about nineteen additional years with income below $3000. These times are subject to considerable variability, however, and therefore individual families will spend a much longer or shorter time at the below-$3000 level. [ABSTRACT FROM AUTHOR]