Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Demography
Published in: Demography 3/2018

07-05-2018

Children and the Elderly: Wealth Inequality Among America’s Dependents

Authors: Christina M. Gibson-Davis, Christine Percheski

Published in: Demography | Issue 3/2018

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Life cycle theory predicts that elderly households have higher levels of wealth than households with children, but these wealth gaps are likely dynamic, responding to changes in labor market conditions, patterns of debt accumulation, and the overall economic context. Using Survey of Consumer Finances data from 1989 through 2013, we compare wealth levels between and within the two groups that make up America’s dependents: the elderly and child households (households with a resident child aged 18 or younger). Over the observed period, the absolute wealth gap between elderly and child households in the United States increased substantially, and diverging trends in wealth accumulation exacerbated preexisting between-group disparities. Widening gaps were particularly pronounced among the least-wealthy elderly and child households. Differential demographic change in marital status and racial composition by subgroup do not explain the widening gap. We also find increasing wealth inequality within child households and the rise of a “parental 1 %.” During a time of overall economic growth, the elderly have been able to maintain or increase their wealth, whereas many of the least-wealthy child households saw precipitous declines. Our findings suggest that many child households may lack sufficient assets to promote the successful flourishing of the next generation.
previous article Health Selection, Migration, and HIV Infection in Malawi
next article Growing Wealth Gaps in Education

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
Appendix
Available only for authorised users
Footnotes
1
Disparities in wealth between two groups, or a gap in wealth between groups, is conceptually distinct from levels of wealth inequality, or the dispersion of the wealth distribution.
 
2
Wealth, as a measure of stock of resources, is distinguishable from income, which measures the flow of resources. Among families with children, wealth and income are modestly correlated at .50 (Keister 2000). Wealth inequality has increased more rapidly than income inequality (Keister and Moller 2000; Wolff 2016), suggesting that trends in wealth inequality are not reducible to those for income inequality.
 
3
Two other demographic factors—educational attainment and age—have also shifted over time, as the United States population has become more educated and older (Mather et al. 2015; Ryan and Bauman 2016). Increased educational attainment is evident for both child and elderly households, and therefore is unlikely to contribute to widening gaps between the groups. Increased age among the elderly might downwardly bias gaps if, over time, a larger share of elderly households were in an age range where they were rapidly spending down their assets. The age of household heads for elderly households in our sample increased by only one year between 1989 and 2013, with a similar standard deviation (see Table 1).
 
4
The SCF describes itself as a sample of “families,” but its definition of family (people at the same address sharing living quarters) is more akin to the U.S. Census definition of households. Following Wolff (2014), we discuss our unit of analysis as households.
 
5
Cohabiting households with an unmarried man and unmarried woman were classified in the unmarried male head category because the SCF classified all households with a different-sex couple as male-headed.
 
6
SCF estimates of educational attainment were quite similar to Current Population Survey (CPS) estimates in the same years (results not shown).
 
7
We investigated using the Survey of Income and Program Participation (SIPP) for this purpose, but SIPP estimates of wealth were inconsistent with SCF estimates and did not seem credible.
 
8
Estimating household median wealth at different points in the distribution is akin to estimating median wealth at the midpoint of that distribution: for example, household median wealth in the bottom 50 % is the average of the median wealth for households at the 25th and 26th percentile.
 
9
When all households were compared across time (available upon request), median net worth fell by 5.8 %. Households in the bottom 50 % had declines of 87 %, whereas those in the top 1 % had increases of 82 %.
 
10
In additional analyses, we divided households into the 0th–25th percentiles and the 26th–50th percentiles. Our main conclusions regarding the gap between elderly and child households remained the same. Notably, child households in both quartiles lost economic ground to elderly households in similar distributional positions between 1989 and 2013.
 
11
These net worth Gini coefficients may seem implausibly high, but they were consistent with other SCF-based estimates of net worth inequality (e.g., Keister 2014; Wolff 2016).
 
12
Information on types of debt were not collected in 1989.
 
13
Home debt rose in the mid-2000s but then fell to 1990s levels after the Great Recession.
 
Literature
Ando, A., & Modigliani, F. (1963). The “life cycle” hypothesis of saving: Aggregate implications and tests. American Economic Review, 53, 55–84.
Autor, D. H. (2014). Skills, education, and the rise of earnings inequality among the other 99 percent. Science, 344, 843–851.CrossRef
Autor, D. H., Katz, L. F., & Kearney, M. S. (2008). Trends in U.S. wage inequality: Revising the revisionists. Review of Economics and Statistics, 90, 300–323.CrossRef
Ben-Shalom, Y., Moffitt, R. A., & Scholz, J. K. (2012). An assessment of the effectiveness of anti-poverty programs in the United States. In P. N. Jefferson (Ed.), Oxford handbook of the economics of poverty (pp. 709–749). Oxford, UK: Oxford University Press.
Bond Huie, S. A., Krueger, P. M., Rogers, R. G., & Hummer, R. A. (2003). Wealth, race, and mortality. Social Science Quarterly, 84, 667–684.CrossRef
Boshara, R., Emmons, W. R., & Noeth, B. (2015). The demographics of wealth: How age, education and race separate thrivers from strugglers in today’s economy (Demographics of Wealth Essay No. 1). St. Louis, MO: Center for Household Financial Stability at the Federal Reserve Bank of St. Louis.
Bricker, J., Dettling, L. J., Henriques, A., Hsu, J. W., Moore, K. B., Sabelhaus, J., . . . Windle, R. A. (2014). Changes in U.S. family finances from 2010 to 2013: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, 100(4), 1–41.
Child Trends. (2016). Racial and ethnic composition of the child population (Report). Washington, DC: Child Trends.
Conley, D. (2001). Capital for college: Parental assets and postsecondary schooling. Sociology of Education, 74, 59–72.CrossRef
Elliott, W. III, Destin, M., & Friedline, T. (2011). Taking stock of ten years of research on the relationship between assets and children's educational outcomes: Implications for theory, policy and intervention. Children and Youth Services Review, 33, 2312–2328.CrossRef
Houle, J. N. (2014). A generation indebted: Young adult debt across three cohorts. Social Problems, 61, 448–465.CrossRef
Hurd, M. D. (1987). Savings of the elderly and desired bequests. American Economic Review, 77, 298–312.
Kalleberg, A. L. (2009). Precarious work, insecure workers: Employment relations in transition. American Sociological Review, 74, 1–22.CrossRef
Keister, L. A. (2014). The one percent. Annual Review of Sociology, 40, 347–367.CrossRef
Keister, L. A., & Moller, S. (2000). Wealth inequality in the United States. Annual Review of Sociology, 26, 63–81.CrossRef
Kennickell, A. B. (2008). The role of over-sampling of the wealthy in the Survey of Consumer Finances. Irving Fisher Committee Bulletin, 28, 403–408.
Kennickell, A. B. (2009). Ponds and streams: Wealth and income in the U.S., 1989 to 2007 (Finance and Economics Discussion Series No. 2009-13). Washington, DC: Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board.
Larrimore, J., Dodini, S., & Thomas, L. (2016). Report on the economic well-being of U.S. households in 2015. Washington, DC: Board of Governors of the Federal Reserve System.
Li, W., & Goodman, L. (2015). Americans’ debt styles by age and over time (Report). Washington, DC: Urban Institute.
Mather, M., Jacobsen, L. A., & Pollard, K. M. (2015). Aging in the United States. Population Bulletin, 70(2), 1–19.
McGrath, D. M., & Keister, L. A. (2008). The effect of temporary employment on asset accumulation processes. Work and Occupations, 35, 196–222.CrossRef
Modigliani, F. (1988). The role of intergenerational transfers and life cycle saving in the accumulation of wealth. Journal of Economic Perspectives, 2(2), 15–40.CrossRef
Moffitt, R. A. (2015). The deserving poor, the family, and the U.S. welfare system. Demography, 52, 729–749.CrossRef
Pfeffer, F. T., Danziger, S., & Schoeni, R. F. (2013). Wealth disparities before and after the Great Recession. Annals of the American Academy of Political and Social Science, 650, 98–123.CrossRef
Pfeffer, F. T., & Killewald, A. (2015). How rigid is the wealth structure and why? Inter-and multi-generational associations in family wealth (PSR Reports No. 15-845). Ann Arbor: University of Michigan Institute for Social Research.
Pfeffer, F. T., & Schoeni, R. F. (2016). How wealth inequality shapes our future. Russell Sage Foundation Journal of the Social Sciences, 2(6), 2–22.CrossRef
Preston, S. H. (1984). Children and the elderly: Divergent paths for America’s dependents. Demography, 21, 435–457.CrossRef
Ryan, C. L., & Bauman, K. (2016). Educational attainment in the United States: 2015 (Current Population Reports No. P20-578). Washington, DC: U.S. Census Bureau.
Saez, E., & Zucman, G. (2016). Wealth inequality in the United States since 1913: Evidence from capitalized income tax data. Quarterly Journal of Economics, 131, 519–578.CrossRef
Shrestha, L. B., & Heisler, E. J. (2011). The changing demographic profile of the United States (CRS Report for Congress, No. RL32701). Washington, DC: Congressional Research Service.
Thompson, J., & Smeeding, T. M. (2012). Country case study—USA. In S. P. Jenkins, A. Brandolini, J. Micklewright, & B. Nolan (Eds.), The Great Recession and the distribution of household income (pp. 201–233). Oxford, UK: Oxford University Press.
Toossi, M. (2009). Labor force projections to 2018: Older workers staying more active. Monthly Labor Review, 132, 30–51.
West, L. A., Cole, S. D., Goodkind, D., & He, W. (2014). 65+ in the United States: 2010 (Current Population Reports No. P23-212). Washington, DC: U.S. Government Printing Office.
Wolff, E. N. (2012). The asset price meltdown and the wealth of the middle class (NBER Working Paper No. 18559). Cambridge, MA: National Bureau of Economic Research.
Wolff, E. N. (2016). Household wealth trends in the United States, 1962 to 2013: What happened over the Great Recession? Russell Sage Foundation Journal of the Social Sciences, 2(6), 24–43.CrossRef
Wolff, E. N., Owens, L. A., & Burak, E. (2011). How much wealth was destroyed during the Great Recession? In D. B. Grusky, B. Wester, & C. Wimer (Eds.), The Great Recession (pp. 127–158). New York, NY: Russell Sage.
Yellen, J. L. (2016). Perspectives on inequality and opportunity from the Survey of Consumer Finances. Russell Sage Foundation Journal of the Social Sciences, 2(2), 44–59.CrossRef
Metadata
Title
Children and the Elderly: Wealth Inequality Among America’s Dependents
Authors
Christina M. Gibson-Davis
Christine Percheski
Publication date
07-05-2018
Publisher
Springer US
Published in
Demography / Issue 3/2018
Print ISSN: 0070-3370
Electronic ISSN: 1533-7790
DOI
https://doi.org/10.1007/s13524-018-0676-5

Other articles of this Issue 3/2018

Demography 3/2018 Go to the issue

OriginalPaper

Gender Differences in the Consequences of Divorce: A Study of Multiple Outcomes

OriginalPaper

Beyond the Border and Into the Heartland: Spatial Patterning of U.S. Immigration Detention

OriginalPaper

Measuring Geographic Migration Patterns Using Matrículas Consulares

OriginalPaper

School Progress Among Children of Same-Sex Couples

OriginalPaper

Education and Physical Health Trajectories in Later Life: A Comparative Study

OriginalPaper

The Role of Family Behaviors in Determining Income Distribution: The Case of South Korea