Assets and Economic Mobility in a Youth Cohort, 1985–1997

Abstract

This study examined the role of assets in economic mobility within a youth cohort (N = 4,467) between 1985 and 19 97. Increasing percentages of poor and affluent youth resided in families with no change in economic status while increasing percentages of middle-class youth resided in families experiencing downward economic mobility. The rate of economic stasis of youth living in affluent families was about three times that of those in poor families. Length of time of asset ownership influenced economic mobility beyond that of background, sociodemographic, psychological, and other cumulative correlates. In particular, IRAs and tax-deferred annuities were related to positive economic mobility. Robust indicators of positive economic mobility included being a college graduate, number of siblings in family of origin, number of years of full-time employment, number of years living in households where someone received either AFDC/TANF or SSI, and locus of control. Robust indicators of downward economic mobility included age of respondent, number of years married, and being Catholic. Finally, neither sex nor race/ethnicity increased the explanatory power of positive economic mobility beyond that of other correlates regardless of asset ownership. Discussion also includes public and private initiatives to expand IRAs into Individual Development Accounts and to encourage employers to offer (and workers to take advantage of) tax-deferred annuities, particularly for low-income workers.