The rise and fall of median wealth in the U.S.: A birth-cohort story

We use recently published long-run microdata (SCF+) to investigate generational wealth dynamics in the U.S. over the last seven decades. We document that the median wealth of people born in the first half of the 20th century increased from one ten-year birth cohort to the next. For people born in the second half of the century, median wealth successively declined from cohort to cohort while wealth inequality within birth cohorts increased markedly. A synthetic saving approach reveals that the trend reversal is mainly caused by changes in savings, which are a result of stagnating income levels and, importantly, declining saving rates. We find no evidence that shifts in wealth accumulation preferences, observable household characteristics or other demographic changes can explain our findings.