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Press Release

Wealth mobility has declined since the 1980s, say Cleveland Fed researchers

Examining data on families’ wealth over the past three decades, Federal Reserve Bank of Cleveland researchers Daniel Carroll and Nicholas Hoffman calculate changes in relative wealth mobility, i.e., how likely families are to move up or down the wealth distribution, relative to one another. They find that families have become less likely to change their position in the wealth distribution over time, and those that do move are less likely to go very far. Carroll and Hoffman also find that those families that make large movements through the wealth distribution appear to be more likely to own some form of a risky asset.

“Irrespective of the measure chosen, the data indicate that wealth mobility has decreased over the past three decades,” say Carroll and Hoffman. “On average, households are now more likely to remain in the same wealth quintile over 10-year periods than they were two decades ago (Shorrocks index) and they are less likely to experience large movements across quintiles (Bartholomew index).” The researchers say the probability that a household outside of the top quintile transitioned into it within 10 years was roughly half as likely between 2003 and 2013 as it was between 1984 and 1994.

Carroll and Hoffman say rising wealth inequality played only a modest role in limiting the probability of families exiting their initial wealth quintile (Shorrocks), but it had a much larger effect on the likelihood that a household ended in a more distant quintile (Bartholomew). In other words, families were only slightly less likely to move, but much less likely to move very far.

The researchers also examined the characteristics of households that did move far in the wealth distribution. “Notably, an increased tendency to own a risky asset, such as stocks, a farm or a business, was a hallmark both of families that moved up three or more quintiles and of those that moved down three or more quintiles,” say Carroll and Hoffman.

The researchers note that households’ savings and investment behavior is not the only factor that affects their wealth mobility. Marriage and divorce, which may lead to assets being combined or separated, can cause large movements upward and downward, as can age. Young households are generally more wealth-poor because they have had little time to save, while older households typically save more, paying down debt and building up assets. Luck can also play a role, as in the case of an unforeseen illness that leads to expensive medical bills or receiving a large bequest from a parent.

Read New Data on Wealth Mobility and Their Impact on Models of Inequality

And for Carroll’s work on a related topic, see Income Inequality Matters, but Mobility Is Just as Important

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.455.4479