How can reparations reduce the racial wealth gap in the United States? An analysis of the racial wealth gap’s creation, preservation, and solution.

This thesis analyzes the Black-White racial wealth gap in the United States by examining how it was created by enslavement and continued through institutionalized discrimination. The focus is, in particular, on the exclusion of Black Americans from education and investment in real estate. I look at the scope of the wealth gap by evaluating general wealth in the United States and the different levels of ownership of assets between Black and White Americans, relating them to the previous discussion on discrimination. To ensure that what becomes an apparent wealth disparity is, in fact, a result of enslavement and exclusion, I consider other possible reasons for it and the continuance of the racial wealth gap. Once the Black-White racial wealth gap and its scope have been established, I turn to reparations as a means for reducing it. To evaluate reparations, I first discuss how they should be distributed to minimize the issue of moral hazard. I then calculate what the cost of a reparations plan could be, first with a model for the present value of wages and then with a more direct calculation based on the current value of the wealth gap. Lastly, I examine the ways in which reparations could be paid out. The thesis ends with a discussion on the social benefits of increasing the median wealth level for Black Americans, not only for that subpopulation but also for all citizens and the United States. I conclude that reparations should be made by distributing bond accounts to all children under 18 years in the United States, and eligible recipients over the age of 18 years should receive a lump sum with a value high enough to close the current median wealth gap. This will not only increase the median wealth level of Black Americans but increase general wealth in the United States