Intergenerational Mobility and Housing Wealth in the United States

• In Event: Mobility, Wealth, and Wages

Abstract

A long literature has examined the intergenerational mobility of income in the United States. Yet, housing is not reflected in income flows and is the most important capital asset for most U.S. households. Using a novel dataset linking income tax records, property ownership and valuation records, and the 2000 Census Long Form, we provide new evidence on the intergenerational relationship between parent and child housing assets. We develop a simple framework that decomposes housing wealth mobility into direct channels working through parental wealth itself, and indirect channels working through the influence of parental wealth on child labor income. We find that housing wealth is substantially more persistent across generations than income. Direct effects are particularly important in explaining this persistence as well as the extremely large housing wealth gap between Black and White children born to wealthy parents. We also show that housing wealth mobility exhibits a distinct geospatial pattern from income mobility, and present evidence linking this spatial variation to local housing supply constraints. We develop a difference-in-difference model that identifies variation in county-level price shocks generated by variation in housing supply elasticities. Our results indicate that housing supply expansions could meaningfully raise housing wealth mobility, particularly in more-inelastic areas, while exerting ambiguous effects on Black-White mobility gaps.

Authors

• Max Risch, Carnegie Mellon University

• John Voorheis, US BUREAU OF THE CENSUS