Is There Wealth Stability Across Generations in the U.S.? Evidence from Panel Study, 1984-2017

Abstract

The net wealth accumulation of (grand)parents appears to be strongly determinative of the net wealth holdings of their adult (grand)children. While these general features are understood, few details are known about the persistence of wealth components that determine overall portfolio outcomes and their variance. Using longitudinal data, I show that grandparents and parents figure prominently, not only in net wealth, but also in a range of household portfolio allocations (risky assets, safe assets, non-financial assets) of the current generation. Meanwhile, I find that there is persistence in intergroup disparities in wealth components. I find consistent results whether I examine intergenerational wealth correlation before or after the Great Recession of 2007-2009. These findings shed light on the connection between intergenerational networks, asset building, and intergroup disparities in wealth.

Keywords: stratification economics, intergenerational mobility, household portfolio allocations

JEL Classification: Z13, D31, D64, J15