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Wealth concentration in the USA using an expanded measure of net worth
[Top wealth shares in the UK over more than a century]

Author

Listed:
  • Lindsay Jacobs
  • Elizabeth Llanes
  • Kevin Moore
  • Jeffrey Thompson
  • Alice Henriques Volz

Abstract

Defined benefit (DB) pensions and Social Security are important resources for financing retirement in the USA. However, these illiquid, nonmarket forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This article develops an alternative, expanded wealth concept, augmenting net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We explore the concentration of wealth among households ages 40–59 and find that (i) including DB pension and Social Security results in markedly lower measures of wealth concentration and (ii) trends toward higher wealth inequality over time, while moderated, are still present. Simulation exercises show that reductions in Social Security benefits significantly increase wealth concentration for the youngest birth-year cohorts.

Suggested Citation

  • Lindsay Jacobs & Elizabeth Llanes & Kevin Moore & Jeffrey Thompson & Alice Henriques Volz, 2022. "Wealth concentration in the USA using an expanded measure of net worth [Top wealth shares in the UK over more than a century]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 623-642.
    • Handle: RePEc:oup:oxecpp:v:74:y:2022:i:3:p:623-642.
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    File URL: http://hdl.handle.net/10.1093/oep/gpab054
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    Citations

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    Cited by:

    1. Sierminska, Eva & Wroński, Marcin, 2022. "Inequality and Public Pension Entitlements," GLO Discussion Paper Series 1212, Global Labor Organization (GLO).
    2. Wroński, Marcin, 2023. "The impact of social security wealth on the distribution of wealth in the European Union," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    3. David Brady, 2022. "Income and Wealth as Salient Gradational Aspects of Stratification," LIS Working papers 845, LIS Cross-National Data Center in Luxembourg.
    4. Brady, David, 2022. "Income And Wealth As Salient Gradational Aspects Of Stratification," SocArXiv pny3t, Center for Open Science.
    5. John Edward Sabelhaus & Jeffrey P. Thompson, 2023. "The Limited Role of Intergenerational Transfers for Understanding Racial Wealth Disparities," Current Policy Perspectives 95748, Federal Reserve Bank of Boston.
    6. Hope Bodenschatz & Gerald Eric Daniels Jr. & Jeffrey P. Thompson, 2023. "Decomposing Lifetime-Earnings Differences between White, Black, and Hispanic Families," Working Papers 23-14, Federal Reserve Bank of Boston.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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