YSI – Economic History Graduate Webinar: Iris Fu

Iris Fu, Phd student at the University of California, Los Angeles, will present her work: Intergenerational Transmission of Wealth Loss: Evidence from the Freedman’s Bank

Abstract:
This paper provides a comprehensive analyses of the intergenerational effects of negative shock in wealth for African Americans by examining a historical episode, the failure of the Freedman’s Bank (1865-1874), which resulted in the loss of deposits for approximately 100,000 depositor. I collect individual-level bank depositor records and conduct follow-up of the descendants’ educational and occupational outcomes through the 1880 and 1900 Censuses. To estimate the causal effect of depositing, I employ an instrumental variable strategy which exploits county-level differences in the take up rate in banking. I find that children of depositors were more likely to be literate than children of non-depositors. The effect is explained by the positive intergenerational effects from financial literacy and inclusion, which
outweighs the negative impact of the wealth loss.