Wealth Mobility in the United States: Empirical Evidence from the PSID

This paper leverages data from the Panel Study of Income Dynamics (PSID) to analyze inter- and intra-generational wealth mobility in the United States. Having constructed a gradient-boosting ML-model to obtain wealth rank approximations until 1969, I provide a rich set of empirical wealth mobility moments. Several findings stand out. First, overall inter-generational wealth mobility and intra-generational wealth mobility at the top have declined over time. Second, wealth mobility in the United States is lower compared to most other countries for which wealth mobility data is available. Third, the majority of wealth mobility occurs between ages 30 and 39, and wealth rank resemblance between (grand)parents and their (grand)children increases with age. Fourth, wealth mobility at the top is significantly higher across three versus two generations, while the difference in mobility at the bottom is comparatively weaker. Fifth, there exists positive inter-dependence between individuals’ wealth rank trajectories and those of their parents over the same time period. Sixth, diverging wealth mobility outcomes across families and individuals are associated with variation in inter-generational transfers, business ownership, labor income, health and non-mortgage indebtedness.