How Rigid Is the U.S. Wealth Structure? Inter- and Multigenerational Correlations in Family Wealth

Friday, 3 July 2015: 10:15 AM-11:45 AM
TW2.1.04 (Tower Two)
Fabian T. Pfeffer, University of Michigan, Ann Arbor, MI; University of Michigan, Ann Arbor, MI
Alexandra Killewald, Harvard University, Cambridge, MA
SHORT ABSTRACT (for 850 word abstract including preliminary results see "full paper")

Although we know that the distribution of family wealth is highly unequal, wealth’s concentration across generations has received little attention from social scientists. Taking advantage of the unique genealogical design of the Panel Study of Income Dynamics (PSID), we describe the similarity in the wealth position between parents and their children at similar ages. To explore the potential for dynastic wealth, we also add data on grandparents’ wealth and describe the persistence and direct transmission of wealth across three generations. We significantly expand upon a few prior contributions that reported intergenerational elasticities in net worth (Mulligan 1997; Conley 1999; Charles and Hurst 2003) by assessing distinct wealth components, heterogeneity across race and time, and multigenerational associations. Moreover, by drawing on more recent PSID data, we are able to rectify the life-cycle bias in prior estimates based on a sample of children observed at much younger ages than their parents.