Decomposing wealth mobility in the US: The role of education and income

Using long-running panel data from the United States, I estimate the association between parent’s housing wealth and the net wealth of their offspring, 30 years after. I contrast these estimates against measures of intergenerational persistence in income and education. To better understand the relationship between these three measures, I decompose the rank-rank correlation for wealth into the contribution of income and education, of both parents and offspring. Over the 1997 to 2019 period the rank-rank slope for wealth remained relatively stable, with a coefficient around 0.25. Parental education accounts for about a quarter of that coefficient, remaining relatively constant across the whole period. The influence of parental and offspring income has increased in the aftermath of the Great Recession, going from around an eight to a fifth. Further decomposing the sample, I find that the growing importance of income in accounting for wealth persistence is stronger among offspring who have received an inheritance in the past.

 

 

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