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Wealth structures and income distribution of US households before and after the Great Recession

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  • Szymborska, Hanna Karolina

Abstract

This paper investigates the empirical relationship between household wealth composition and income inequality in the USA, proxied by households’ relative position in the income distribution. Previous research highlights wealth–income interactions as an important driver of inequality, but less is known about whether wealth composition is conducive to sustained improvements in relative income across households. Using non-parametric median slope analysis on the U.S. Survey of Consumer Finances between, 1989-, 2013, the paper examines patterns of empirical regularities between wealth composition and relative income, finding significant differences over time and between income, gender, racial, and intergenerational groups. Households holding more wealth in other property, business equity, financial investment, retirement and insurance assets, and secured debt are found to occupy higher position in the income distribution compared to households whose wealth is dominated by main residence. However, these positive effects are not experienced equally as they are found to be significantly lower for households in the poorest 20% of the income distribution and for female, Black/Latino, and millennial households.

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  • Szymborska, Hanna Karolina, 2019. "Wealth structures and income distribution of US households before and after the Great Recession," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 168-185.
    • Handle: RePEc:eee:streco:v:51:y:2019:i:c:p:168-185
    DOI: 10.1016/j.strueco.2019.08.011
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    Cited by:

    1. Hanna Karolina Szymborska, 2022. "Rethinking inequality in the 21st century – inequality and household balance sheet composition in financialized economies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 45(1), pages 24-72, January.
    2. Yu, Jian & Shi, Xunpeng & Cheong, Tsun Se, 2021. "Distribution dynamics of China's household consumption upgrading," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 193-203.
    3. Albert, Juan-Francisco & Peñalver, Antonio & Perez-Bernabeu, Alberto, 2020. "The effects of monetary policy on income and wealth inequality in the U.S. Exploring different channels," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 88-106.

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    More about this item

    Keywords

    Income inequality; Household wealth; Financial sector; Non-parametric estimation;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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