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Wealth Inequality and Intergenerational Income Mobility in the United States

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  • Schechtl, Manuel

Abstract

Where income inequality is higher, intergenerational mobility in income is lower. Income inequality affects upward mobility because exposure to socioeconomic disparities during childhood influences economic opportunities. Beyond income, wealth is also distributed unequally and can facilitate the hoarding of opportunities. Therefore, this study inves- tigates whether wealth inequality is negatively associated with intergenerational income mobility. To examine the impact of childhood exposure to wealth inequality on upward mobility in income, this study utilizes a unique, novel database that makes local estimates of wealth inequality across the United States publicly available. Results from linear mod- els estimated by OLS reveal a clear, negative association between childhood exposure to wealth inequality at the commuting zone level and mobility outcomes later in life. This re- lationship persists when accounting for levels of income, wealth, and income inequality, as well as other economic and demographic characteristics. Static counterfactual simulations suggest that childhood exposure to wealth inequality has more significant consequences for upward income mobility than income inequality itself.

Suggested Citation

  • Schechtl, Manuel, 2024. "Wealth Inequality and Intergenerational Income Mobility in the United States," OSF Preprints yjvru, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:yjvru
    DOI: 10.31219/osf.io/yjvru
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    References listed on IDEAS

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    4. Hällsten, Martin & Pfeffer, Fabian T., 2017. "Grand advantage: family wealth and grandchildren's educational achievement in Sweden," Working Paper Series 2017:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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