31 May 2022

Stable intergenerational wealth

Wealth inequality

When Meltem Daysal and co-authors Michael F Lovenheim, and David N Wasser study the intergenerational correlation of wealth there are three key insights that emerge.

First, they find that the intergenerational wealth correlations based on housing wealth are much more stable as children age in comparison to estimates based on net wealth.

Second, they show that intergenerational correlations of housing wealth are inversely related to household income at all ages but that there is little variation in net wealth correlations across the income distribution.

Third, they show that intergenerational net wealth and gross housing wealth correlations move in opposite directions across the income distribution. These correlations converge at the seventieth percentile of parental income, which likely is driven by the higher relative debt burden of lower-income households at the time of measurement.

Meltem DaysalThe paper by Meltem and co-authors is published in the AEA Papers and Proceedings. You can read paper, The Correlation of Net and Gross Wealth across Generations: The Role of Parent Income and Child Age, at American Economic Association’s webpage.