Wealth cushions adverse economic shocks, such as loss of employment, and helps to fund investments in human capital, like college and post-graduate training. Wealth inequality is much higher than income inequality in the United States. Understanding the dynamics of wealth accumulation may be important in narrowing wealth gaps. Here we study intragenerational wealth mobility using the Panel Study of Income Dynamics (PSID).

Using a measure of individual wealth, we first study relative wealth mobility across the prime wealth accumulation years and find that a ten-point increase in an individual’s wealth percentile in their early thirties leads to a 5.9-point increase in their wealth percentile in their late fifties (i.e., a rank-rank slope of 0.59).

We also show that rates of wealth mobility are highest between the ages of 25 and 35. Finally, we consider how wealth mobility differs across socioeconomic groups. Black Americans experience much less upward wealth mobility and much more downward wealth mobility than white Americans, conditional on the same initial wealth level.

Read the full article about wealth mobility by Ariel Gelrud Shiro, Christopher Pulliam, John Sabelhaus, and Ember Smith at Brookings.