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.
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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