Dimensions of Wealth Inequality
Saturday, Jan. 6, 2018 2:30 PM - 4:30 PM
- Chair: Harry C. Katz, Cornell University
The Lasting Effect of Intergenerational Wealth Transfers: Human Capital, Family Formation, and Wealth
AbstractRecent evidence indicates that inheritances and other intergenerational wealth transfers have only a limited effect on wealth inequality and the intergenerational transmission of financial well-being. In this study, we explore the role that human capital and family formation play in mediating the relationship between receiving a transfer and building wealth. We examine how educational attainment and family formation determine whether or not households are able to convert inheritances into greater assets, facilitating improved wealth accumulation. Using data from the Panel Study for Income Dynamics (PSID), we examine how these factors moderate wealth accumulation trajectories following a bequest or inter vivos gift. Results reveal that educational attainment and marriage each facilitate wealth accumulation following a transfer. Our evidence suggests that cumulative advantage processes produce divergent wealth accumulation trajectories but these are situated in important turning points in the life course.
Long Run Developments of Income and Wealth Inequality: Do They Move Together?
AbstractIn the current debate about rising inequality the issue of a possible disconnect between the development of wealth inequality and income inequality has come to the forefront. More specifically, while there is a broad consensus about the development of income inequality (increasing in most countries in the past decades) there is less agreement about the movements in the distribution of wealth. Some find that wealth inequality has increased, some that it has not. Amongst those who find no increase, some think that it is due to measurement problems or a lagged relationship between the two distributions, while others insist that there doesn't have to be any connection. Theory about this relationship offers a wide range of possibilities. In this paper we look at how history can inform us about the possible co-developments of income and wealth distribution. First, what has been the relationship between the developments of the income and wealth distribution respectively? Second, is there heterogeneity in this relationship across time or countries (or both)? Third, do we think the patterns can be explained by fundamental differences and changes over time or are they more likely a result of measurement errors?
Has Middle Class Wealth Recovered?
AbstractAsset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2013. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010, almost double the drop in housing prices. The inequality of net worth, after almost two decades of little movement, was also up sharply. Relative indebtedness expanded, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable primarily to the high leverage of middle class families and the high share of homes in their portfolio. The racial and ethnic disparity in wealth also widened considerably. Households under age 45 saw their relative and absolute wealth declined sharply. Rather remarkably, there was virtually no change in median wealth from 2010 to 2013 despite the rebound in asset prices. This paper will update household wealth trends to 2016.
- N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy