Intergenerational transfers and the prospects for increasing wealth inequality

Analyzing two cohorts from the Health and Retirement Survey from 1992 to 2002, we investigate the growth of wealth inequality and the determinants of intergenerational transfers. Although wealth inequality has grown substantially, patterns of intergenerational transfers that we are able to assess have changed only modestly. Based on these results, we conclude that concerns that the level of inequality will continue to increase across its full distribution appear unwarranted. This conclusion, however, is limited in two important respects. First, it is based on a single cohort comparison which, however well-chosen, does not guarantee that other cohort comparisons would yield the same results. Second, the nature of survey research on wealth prevents any incisive analysis of the explosive growth of the wealth holdings of those at the very top of the distribution (i.e., those at the 99th percentile and beyond). Thus, we cannot rule out the possibility that a comparison of those beyond the 99th percentile to everyone else would give evidence that, at this pivot point of the distribution, a new level of self-perpetuation has in fact arrived.