Cross-cohort Differences in Wealth Accumulation

• In Event: 20812 - Wealth, Debt, and Financialization

Abstract

Prior research has painted a bleak picture of Millennials’ wealth accumulation, finding they hold less wealth than same-aged peers in earlier cohorts (Emmons, Hernandez Kent, and Ricketts 2018; Gale et al. 2020; Hernandez Kent and Ricketts 2021). More recent research has shown that the between-cohort increase in wealth inequality is mainly due to higher monetary returns to white collar professional pathways and delayed marriage and parenthood (Gruijters, Van Winkle, and Fasang 2023). These findings imply that while inequality grows, a generation of Americans may lack the resources necessary to own a home, cushion economic shocks, and save for retirement. Drawing on the principles of life course theory (Elder 1998), we seek more detailed explanations, including the timing of national economic changes in individuals’ life course. We pay special attention to economic recessions as well as differences in access to the housing market and returns to homeownership. Our preliminary findings show that Millennials’ asset composition differs from that of Baby Boomers, which coupled with the timing of housing market crises and recoveries, can explain why wealthier Millennials have reduced their disadvantage (according to the SCF) or gained and advantage (according to the NLSY) vis-à-vis their baby boomer counterparts.

Authors

• David Arbelaez, Harvard University

• Alexandra Killewald, University of Michigan-Ann Arbor