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November 16, 2022

SOEP Brown Bag Seminar

Generational Wealth Inequality Across the Distribution: Trends in the U.S. since 1949


November 16, 2022


Francine D. Blau Room
DIW Berlin
Room 3.3.002b
Mohrenstraße 58
10117 Berlin


Philip Schacht, RWI - Leibniz Institute for Economic Research
Using recently published U.S. long-run microdata (SCF+), we document that — for people born in the first half of the 20th century — median wealth used to increase from one ten-year birth cohort to another. For people born in the second half, median wealth successively declined from cohort to cohort and wealth inequality within birth cohorts has markedly increased. Shifts in observable household characteristics, life expectancy, length of educational paths or the repercussions of the Great Recession cannot conclusively explain these wealth patterns. A synthetic saving approach suggests that the growing wealth gap across and within cohorts is mainly caused by diverging savings, which are driven by changes in income levels and, importantly, saving rates. We hypothesize that shifts in economic circumstances, rather than preferences, are the main reason behind the declining saving rates of low- and median-wealth households.