Stability and Turning Points in Life Course Trajectories: The Example of Wealth

• In Event: Inequalities in Income, Wealth, and Related Outcomes

Abstract

This paper develops a conceptual and empirical framework to analyze stability and turning points in individual wealth trajectories over the life course. Although wealth inequality has been widely examined from cross-sectional and intergenerational perspectives, a central gap remains: research lacks a systematic account of how wealth evolves within individuals over time and how continuity and turning points are jointly structured. Existing approaches typically assume smooth life-cycle accumulation or rely on aggregate analyses. Such strategies risk aggregation bias by masking heterogeneity and obscuring regime shifts that unfold at the individual level.
The primary contribution of this study is threefold. First, it advances a conceptual clarification of turning points within a life course framework. We define trajectories as age-graded developments structured by relatively stable trajectory regimes and conceptualize turning points as abrupt and enduring shifts in level, trend, or volatility that disrupt these stabilizing mechanisms. By distinguishing directional turning points (upward or downward mean and trend changes) from volatility turning points (focal or randomizing shifts), the framework extends prevailing definitions that focus almost exclusively on directional change
Second, the paper introduces a methodological contribution by implementing person-centered change-point detection techniques (PELT and Bayesian approaches) to identify regime shifts within single trajectories. This design directly addresses aggregation bias and enables a systematic mapping of stability and rupture across individuals.
Third, by applying this framework to 22 years of longitudinal data from the PSID-SHELF (1999–2021), the study shows how separating periods of stability from abrupt shifts allows us to identify structured heterogeneity in wealth dynamics over the life course.
By integrating conceptual refinement with person-centered methodology, the study advances a dynamic perspective on stratification and provides a template for analyzing turning points in other core domains of inequality research.

Authors

• Sascha dos Santos, DIW Berlin

• Philipp Lersch, Humboldt-University of Berlin