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Recent evidence indicates that inheritances and other intergenerational wealth transfers have only a limited effect on wealth inequality and the intergenerational transmission of financial well-being. In this study, we explore the role that human capital and family formation play in mediating the relationship between receiving a transfer and building wealth. We examine how educational attainment and family formation determine whether or not households are able to convert inheritances into greater assets, facilitating improved wealth accumulation. Using data from the Panel Study for Income Dynamics (PSID), we examine how these factors moderate wealth accumulation trajectories following a bequest or inter vivos gift. Results reveal that educational attainment and marriage each facilitate wealth accumulation following a transfer. Our evidence suggests that cumulative advantage processes produce divergent wealth accumulation trajectories but these are situated in important turning points in the life course. [ABSTRACT FROM AUTHOR]

The article examines the impact of racial differences and asset ownership on wealth distribution in the United States. Racial inequality in socioeconomic well-being has been documented extensively in the social sciences. Research has demonstrated that Blacks, in particular, have not kept pace with whites on indicators such as earnings, labor force participation, labor force outcomes, and quality of living conditions. In 1983, the correlation between total household income and household net worth was 0.49; and when asset income was removed from total income, the correlation dropped to 0.26. This suggests that many of the truly wealthy have rather low earnings, probably because they are able to support current consumption with income derived from assets. A micro-simulation model has been used to explore the relationship between racial differences in asset ownership and wealth inequality. Wealth inequality is still an unresolved issue in America. Levels of wealth inequality are so extreme that most people hardly register any wealth at all, yet wealth is one of the most central indicators of financial well-being and security. Racial differences in wealth ownership are particularly acute and have been relatively persistent in recent decades.