Rebuilding Wealth

The Intergenerational Effects of a Large Wealth Shock: White Southerners After the Civil War

Philipp Ager, Leah Platt Boustan, Katherine Eriksson

NBER Working Paper No. 25700
Issued in March 2019
NBER Program(s):Children, Development of the American Economy, Labor Studies 

The nullification of slave-based wealth after the US Civil War (1861-65) was one of the largest episodes of wealth compression in history. We document that white southern households with more slave assets lost substantially more wealth by 1870 relative to households with otherwise similar pre-War wealth levels. Yet, the sons of these slaveholders recovered in income and wealth proxies by 1880, in part by shifting into white collar positions and marrying into higher status families. Their pattern of recovery is most consistent with the importance of social networks in facilitating employment opportunities and access to credit.

It took fifteen years after the Civil War for the Plantation elites to regain their socio-economic status.

Anecdotally, my wife's parents were refugees of high socio-economic status from North Korea who lost immense family wealth during the Korean War. But, the members of their family managed to land on their feet after emigrating and have become affluent with largely self-made wealth since then.