The association between childhood exposure to local wealth inequality and intergenerational income mobility in the United States.

Abstract

Previous research has documented that income inequality is negatively associated with intergenerational income mobility. Beyond income, wealth is also distributed unequally. However, a lack of comprehensive wealth data has meant that the link between wealth inequality and upward mobility in income remains unclear. This study examines this association using a recently published database of local wealth inequality estimates (GEOWEALTH-US) as well as upward mobility estimates published by Opportunity Insights. Results from linear models estimated by OLS reveal a negative association between childhood exposure to local wealth inequality at the commuting zone level (N = 724) and mobility outcomes later in life. Static simulations show that local wealth inequality is more strongly associated with upward income mobility than income inequality itself. One channel through which local wealth inequality may be associated with lower upward mobility is its correlation with reduced educational attainment among children from families with a low income.