Black-White Disposable Income Inequality: The Rising Importance of Single Women

Abstract The share of tax units headed by single women is twice as large for Black units than White units, and this gender differential in tax unit structure significantly contributes to Black-White income inequality. I decompose the Black-White disposable income gap by tax unit structure categories to estimate single women’s contribution to racial income inequality and examine the extent to which this is influenced by taxes and transfers at the 10th, 25th, and 50th percentiles. At the median, single mothers account for an average of 26 percent of the gap from 1980-2022, and single women without children account for an average of 11 percent. The share attributable to low-income single mothers has declined in recent years, in large part due to redistribution of the tax system and declining inequality between Black and White single mothers. The portion of the gap explained by single women without children has grown consistently since the 1980s and is made larger by the tax system despite declining inequality between Black and White single-childless-women. Singles, particularly single women, represent an under-investigated group in research on tax policy and racial inequality. I provide evidence that single mothers and single women without children are important to understanding Black-White income inequality relative to single men as well as demographic and economic factors. JEL Codes: H24, J12, J15