An Extended Family Approach to Income and Wealth Inequality in the U.S.

• In Event: Inequality, Poverty, and Mobility Section Roundtables
  In Refereed Roundtable (60 minute): 9. Wealth Inequality

Abstract

Most macro-level studies of inequality treat households as the primary unit of analysis. As a result, we know far less about inequality across extended families. Building on research highlighting the importance of intergenerational family ties, we examine income and wealth inequality in the United States using both households and intergenerational extended families, which we term clans, as units of analysis. Using data from the Panel Study of Income Dynamics (PSID), we calculate Gini coefficients for income and wealth at the household and clan levels from 1969 to 2023. We find that inequality is substantially lower when measured at the clan rather than the household level. The income Gini declines by 0.062 points (from 0.432 to 0.370), a 14.35% reduction, while the wealth Gini declines by 0.120 points (from 0.848 to 0.728), or about 14%. Inequality between households is not only higher than inequality between clans in the aggregate but consistently higher across all survey years for both income and wealth. Over time, trends in household and clan inequality are similar for wealth but diverge for income: clan-level income inequality has increased more rapidly than household-level income inequality. Together, these findings demonstrate the importance of considering extended families—in addition to households—when exploring contemporary patterns of inequality in the U.S.

Authors

• Doron Raoul Shiffer-Sebba, Northwestern University

• Amanda Buechele, Northwestern University

• Julia A Behrman, Northwestern University

• Limor Gabay-Egozi, Bar-Ilan University