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Micah Villarreal (Northwestern University): Black Gold: The Effect of Wealth on Descendants of the Enslaved

Abstract: This paper examines how short-term wealth shocks affected the economic trajectories of descendants of the enslaved in the early twentieth-century United States. I exploit a natural experiment in which Creek Freedmen allottees—Black landholders in Oklahoma—received quasi-random windfalls when producing oil wells were drilled on their land allotments. By constructing and linking microdata from the Dawes Rolls, allotment maps, oil drilling records, and U.S. censuses from 1910 to 1940, I show that oil discoveries were as-good-as-random with respect to pre-treatment characteristics. The wealth shocks had modest direct effects on asset accumulation, but large and persistent impacts on human capital. Treated youths were less likely to work, more likely to remain in school, and ultimately attained higher levels of education. Over subsequent decades, they shifted toward white-collar occupations, urban residence, and—by 1940—higher rates of homeownership. These findings provide the first causal evidence on the long-run effects of wealth shocks for descendants of the enslaved. They suggest that wealth enabled strategic investments in education and mobility, generating lasting socioeconomic gains despite ongoing racial barriers.