Intergenerational Transmission of Wealth

This project investigates inequality in family wealth and its intergenerational consequences. Wealth – understood as the total sum of financial and real assets minus debts – is distributed much more unequally than other aspects of economic well-being1 and this inequality has grown substantially over the last decades2.

Wealth inequality in one generation also translates into inequality in opportunity for the next generation3. For instance, the relationship between families’ wealth and their children’s college attainment is strong and rapidly growing4, contributing to intergenerational stability in the wealth distribution5. The influence of family wealth also extends beyond two generations as grandparental wealth and even wealth in the extended family entails important advantages, in the United States and elsewhere5,6,7.

Finally, the U.S. wealth distribution is marked by very large racial gaps, reflecting both historical and ongoing processes of institutionalized discrimination8.

In ongoing work …

  • We seek to add empirical evidence to the idea that family wealth serves an important insurance function9: As a psychological safety net, it influences the decisions of families, such as the decision whether to enroll in college; as a real safety net it is activated when offspring face economic adversity, such as a spell of unemployment.
  • We underline the exceptionally high level of wealth inequality and concentration in the United States in comparison to other countries. We also reveal that a focus on wealth produces a much different international ranking of inequality than one based on income10.
  • We investigate wealth inequality in higher education and trace the long-term effects of changes in financial aid policy.
  • We are working on creating a new data infrastructure that provides the scientific community and public with measures of wealth inequality and intergenerational wealth mobility for the entire United States.
1. Killewald, Alexandra, Fabian T. Pfeffer, and Jared Schachner. 2017 “Wealth Inequality and Accumulation” Annual Review of Sociology 43: 379-404

2. Pfeffer, Fabian T., Sheldon H. Danziger, and Robert F. Schoeni. 2013. “Wealth Disparities Before and After the Great Recession”. Annals of the American Academy of Political and Social Science 650(1): 98-123

3. Pfeffer, Fabian T. and Robert Schoeni. 2016. “How Wealth Inequality Shapes our Future”. RSF: The Russell Sage Foundation Journal of the Social Sciences 2(6): 2-22

4. Pfeffer, Fabian T. 2018. “Growing Wealth Gaps in Education” Demography 55(3):1033-1068

5. Pfeffer, Fabian T. and Alexandra Killewald. 2018. “Generations of Advantage. Multigenerational Correlations in Wealth” Social Forces 96(4): 1411-1442.

6. Hällsten, Martin and Fabian T. Pfeffer. 2017. “Grand Advantage. Family Wealth and Grandchildren’s Educational Achievement in Sweden” American Sociological Review 82(2): 328-360

7. Prix, Irene and Fabian T. Pfeffer. 2017. “Does Donald need Uncle Scrooge? Extended family’s wealth and children’s educational attainment in the United States”. In: Erola, Jani and Elina Kilpi-Jakonen (eds.). Social Inequality Across Generations. The Role of Compensation and Multiplication in Resource Accumulation. Cheltenham: Edward Elgar: 112-135

8. Pfeffer, Fabian T. and Alexandra Killewald. 2019. “Intergenerational Wealth Mobility and Racial Inequality” Socius 5:1-2

9. Pfeffer, Fabian T. 2011. “Status Attainment and Wealth in the United States and Germany”. Pp. 109-137 in Smeeding, Timothy, Robert Erikson, and Markus Jäntti (eds.). Persistence, Privilege, and Parenting. The Comparative Study of Intergenerational Mobility. New York: Russell Sage Foundation

10. Pfeffer, Fabian T. and Nora Waitkus (2019). The Wealth Inequality of Nations” The Inequality Lab Discussion Paper 2019-2.

CID Team Members:

Elizabeth Burland
Dylan Nelson
Fabian Pfeffer
Richard Rodems
Brittany Vasquez

Other Collaborators:

Sheldon Danziger
Martin Ehlert
Matthew Gross
Martin Hällsten
Alexandra Killewald
Irene Prix
Jared Schachner
Robert Schoeni
Andreja Siliunas
Nora Waitkus

Research Areas:
Wealth & Opportunity