A Household Perspective on the Social Origin Wealth Gap | Munich Center for the Economics of Aging - MEA
01.10.2018 - 31.08.2020 /

A Household Perspective on the Social Origin Wealth Gap

This project aims to contribute to an emerging research agenda on the intergenerational transmission of wealth by theorizing and investigating which parental characteristics affect wealth accumulation of their children to which extent and through which mechanisms. A key contribution is to systematically account for the fact that wealth is largely produced in a setting of non-randomly formed couples, potentially amplifying social origin effects on wealth.

We use data from the Survey of Health, Aging and Retirement in Europe (SHARE) to assess wealth gaps for different dimensions of parental background (relating to wealth, occupational status, cultural capital as well as migration background) when wealth accumulation reaches its supposed peak over the life course. We take a strict couple perspective, where household wealth is regressed on parental background and life-course variables for both partners. We employ mediation analysis to assess the relative importance of different channels for the explanation of the relation between each parental characteristic and wealth.

Preliminary results show that parental wealth, parental cultural resources, parental marketable human capital and income, and social integration are related to children’s wealth after midlife. Assortative mating plays an important role in explaining these associations between parental characteristics and the wealth accumulation of their children. When not taken into account, the role of parental background for individual wealth accumulation – and particularly the role of mediating mechanisms, such as educational attainment and occupational placement – is strongly overestimated.

Accounting for assortative mating, we identify the mechanisms operating over the life course that link parental background to later wealth. While status attainment processes via education and occupational placement are generally prominent, they were not always the most important. Parental wealth is most strongly linked to own wealth via bequests and gifts, while education and occupation little role. Also financial sophistication, which has received little attention in the sociological literature, is strongly influential, pointing to the importance of specific financial knowledge over and above formal education. However, all considered channels only account for a rather small fraction of the social origin wealth gap.

The project is conducted in cooperation with Fabian Kratz (LMU Munich).


Dr. Thorsten Kneip

Dr. Thorsten Kneip
Birds of a Feather. A Couple Perspective on the Social Origin Wealth Gap and its Underlying Mechanisms