The African American Dream

African Americans have done pretty well in the United States since slavery and segregation. In fact, all Americans have done well over the years. The Economist reports that two-thirds of Americans who were children in 1968 and are now in their 30s and 40s, have more income than their parents.

When it comes to African Americans, it seems that the only improvement is the movement from low income to middle income. When they hit middle income we actually see them decrease again.

People wonder if this is because of racism but the Economist believes this has more to do with the structure of the Economy.

"Forty years ago a man with a high school diploma could work at a steel factory for a middle-class salary. Nowadays good jobs typically require a college degree, which black men are less likely than whites to have."

This is very interesting because you see the gradual catch-up effect when it comes to the low income catching up. However, there are other problems like getting African Americans to go to college. More people are going to college than ever before but they are still majority black.

The article continues to say that "even when blacks earn the same as white, they tend to be less wealthy." They believe financial education is key here.

This is true evidence of a catch-up effect. This is basically saying that when one group is making more than the other, that the other will be able to catch up faster than the person who started it at all.

A simplified version is here: This reminds me of when I was in Italy and over slept due to jet-lag and no alarm clock. That day we were suppose to fill out forms for class. I got there in barely enough time before class and the form was very complicated. All the students then helped me and I did it in a fraction of the time they did.

That is a catch-up effect and sometimes can be seen as a free-rider effect.

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Published in: on January 16, 2008 at 7:13 pm  Leave a Comment  

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