Association for Public Policy Analysis & Management

This study provides the first analyses of over-time changes in net worth inequality for three groups of families: families with children (resident child under age 18); working age families without children (head is between 18 and 64); and elderly families (head 65 or above). Data, covering the years 1989 through 2013, come from the Survey of Consumer Finance (SCF), the most commonly used dataset on American wealth and assets. We concentrated on trends in net worth (defined as a family’s financial and non-financial assets minus debts), rather than income, as net worth is a richer representation of economic well-being, and because income comparisons between the elderly and non-elderly may be misleading. Inequality was measured through the Gini coefficient and other distributional measures. In the full study, we also compare changes in net worth based on specific time periods (e.g., the Great Recession from 2007-2010) and provide some suggestive evidence as to why trends in economic inequality have diverged so sharply for our subgroups of interest.

Our abstract highlights three facts about inequality that have been missed in previous research (findings discussed in depth in full study). First, not only was inequality (as measured by the Gini coefficient) highest among families with children relative to the other two types, increases in inequality between 1989 and 2013 were driven primarily by families with children. Second, while net worth, regardless of family type, was inequitably distributed by percentile of wealth, this unequal distribution was more concentrated for families with children, and has only increased over time.  While the top1% of families with children saw a large rise in their share of wealth (32.9% in 1989 to 42% in 2013), the bottom 50% saw what little wealth they had dissipate (0.7% in 1989 to -1.4% in 2013). This increased concentration was not evident among elderly families where the share of wealth for by the top 1% and the bottom 50% remained relatively constant.  Finally, the economic fortunes of the bottom 50% of the elderly and the bottom 50% of families which children have diverged over time.  Between 1989 and 2013, among families in the bottom 50% of the net worth distribution, elderly families saw a net gain of 72%, whereas children with families have seen a net loss of 463%. This divergence has occurred both because families with children have seen an increase in debts (particularly educational) and a decrease in assets. Results are robust to holding race and marital status constant over time.