Abstract
This paper analyzes the changes in wealth inequality between college graduates and high-school graduates. The college/high-school net worth gap first narrows from 1989 to 1995 but then increases to the 1989 level thereafter. The wealth gap and income gap seem closely related, as some stylized facts about earnings inequality are also found in the dynamics of wealth inequality. However, a simple life-cycle model based on income differentials cannot account for the wealth gap between the two groups. Dynamics of the wealth gap reflect changing patterns of portfolio composition as the two groups differ substantially in their attitudes towards risk and saving.
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