Wealth Mobility of Families Raising Children in the Twenty-First Century

Abstract

Wealth inequality between the top and bottom deciles has grown over the last 20 years (Piketty and Zucman in Wealth and inheritance in the long run, Centre for Economic Policy Research, London, 2014), as has the racial wealth gap (Shapiro et al. in The roots of the widening racial wealth gap: explaining the black-white economic divide. Institute on Assets and Social Policy, Brandeis University, Waltham, 2013. http://iasp.brandeis.edu/pdfs/Author/sha piro-thomas-m/racialwealthgapbrief.pdf). Within these broad trends of inequality, some families are able to get ahead and grow their wealth, while others are not. Yet we do not understand well the critical variables that increase the likelihood of wealth mobility across the life course-within the same generation. This paper addresses this gap and investigates the following questions: What accounts for intra-generational relative and absolute wealth mobility for families with children in the first decade of the twenty-first century? And how does it differ by race? The paper draws on two longitudinal data sets-the Panel Study of Income Dynamics household survey data matched with neighborhood-level US Census data (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011), and the IASP Leveraging Mobility (LM) study (1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011). Applying an integrated mixed methods design, analyses are conducted in three stages: (1) A grounded theory analytic approach of the LM data determines key variables of wealth mobility: homeownership, income, employment characteristics, extended family wealth, negative life events, and neighborhood factors; (2) regression analyses test these indicators for absolute and relative wealth mobility; and (3) recontextualization through further analyses of LM data deepen the regression results by illustrating the pathways of significant wealth mobility predictors. Results reveal that increasing family income, larger family transfers, consistent long-term homeownership, and in some cases white-collar occupations increase the likelihood of upward relative wealth mobility. Negative life events, higher rates of neighborhood poverty, and black race are negatively correlated with the amount of wealth growth. These key drivers of wealth mobility highlight the need for targeted policies that reinforce and expand opportunities for all families to build wealth over the life course.

Black wealth mobility

“…Identification of these key variables, their patterns and how they are differentially impacted dependent on one's individual race, "highlights the need for targeted policies that reinforce and expand opportunities for all families to build wealth over the life course" (Meschede et al, 2016, p. 77). The study conducted by Meschede et al (2016) highlighted "larger family transfers [(family capital)], consistent long-term homeownership [and] resources available within a community [(neighbourhood capital)], …white-collar occupations [(employment capital)]" (p. 77), human capital, and social capital as the primary factors which influence wealth mobility. This will serve as the groundwork of this study; and these main themes will be discussed in this chapter.…”

The Longitudinal Revolution: Sociological Research at the 50-Year Milestone of the Panel Study of Income Dynamics

“…With home ownership as the key vehicle of wealth accumulation, these inequalities also translate into large racial gaps in net worth. Racial wealth gaps have grown over time and across the life-course and can be found even among otherwise more privileged segments of the population, such as the college educated (Meschede et al 2016;Taylor and Meschede 2018).…”

Review of The color of law: A forgotten history of how our government segregated America

“…Killewald (2013) examined panel data from 1980 to 2009 and observed that among wealth holders, Black families were significantly disadvantaged compared to similar White families; much of the difference is due to parental wealth. Meschede et al (2016) observed that people living in neighborhoods with high concentrations of poverty and families with a Black head-ofhousehold had lower levels of absolute wealth mobility, or the ability to grow wealth. Hamilton et al (2015) explored recent trends in wealth disparities by race and demonstrated consistently lower levels of wealth accumulation rates for people of color compared to Whites, even after controlling for education level, income, and employment.…”