Wealth Mobility in the United States: Empirical Evidence from the PSID

This paper leverages data from the Panel Study of Income Dynamics (PSID) to analyze inter- and intra-generational wealth mobility in the United States. The analysis yields several novel contributions and findings. First, from an inter-generational (family-level) perspective, I develop a gradient boosting machine learning model to approximate household wealth ranks back to 1969. This proxy significantly outperforms the housing-based proxies commonly used in the literature. I find that wealth rank resemblance between (grand)parents and their (grand)children increases with age, that inter-generational wealth mobility has declined over time, and that the United States exhibits lower mobility compared to most other countries with available data. Second, intra-generational (individual-level) wealth mobility is concentrated between ages 30 and 39, has declined at the top of the distribution, and is substantially lower than in the Nordic countries. Diverging wealth rank trajectories are associated with variation in inter-generational transfer receipts, business ownership, labor income, health, and non-mortgage indebtedness. Third, bridging the inter- and intra-generational perspectives, I find positive interdependence between the wealth rank trajectories of individuals and those of their parents over the same historical time period.