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The Relationship between Income and Net Worth in the U.S.: A Virtuous Cycle for High but Not Low Income Households
Rauscher, Emily Elliott, William
Rauscher, Emily
Elliott, William
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Abstract
Is there a reciprocal relationship between household income and net worth and does that relationship depend on initial income? Using cross-lagged panel models of household income and net worth data from the Panel Study of Income Dynamics, we compare the income-wealth relationships of high and low income households from 1989 to 2011. Adjusting for demographic differences, we find a reciprocal relationship between income and wealth for high, but not low, income households. Results suggest intra-generational mobility works differently by initial income, which could partially explain the difficulty of escaping poverty and low U.S. support for liberal social welfare policy.
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This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Poverty on Jan 22, 2016, available online: http://www.tandfonline.com/10.1080/10875549.2015.1094776.
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2016-01-22
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Taylor & Francis
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Rauscher
, Emily and William Elliott.
2016
.
“The Relationship between Income and Net
Worth: A Virtuous Cycle for High but Not Low Income Households.”
Journal of Poverty
20(4): 380
-
395.