Heterogeneity in Family Life Course Patterns and Intra-Cohort Wealth Disparities in Late Working Age

Nicole Kapelle,Sergi Vidal

doi:10.1007/s10680-021-09601-4

Abstract

Considering soaring wealth inequalities in older age, this research addresses the relationship between family life courses and widening wealth differences between individuals as they age. We holistically examine how childbearing and marital histories are associated with personal wealth at ages 50–59 for Western Germans born between 1943 and 1967. We propose that deviations from culturally and institutionally-supported family patterns, or the stratified access to them, associate with differential wealth accumulation over time and can explain wealth inequalities at older ages. Using longitudinal data from the German Socio-Economic Panel Study (SOEP, v34, waves 2002–2017), we first identified typical family trajectory patterns between ages 16 and 50 with multichannel sequence analysis and cluster analysis. We then modelled personal wealth ranks at ages 50–59 as a function of family patterns. Results showed that deviations from the standard family pattern (i.e. stable marriage with, on average, two children) were mostly associated with lower wealth ranks at older age, controlling for childhood characteristics that partly predict selection into family patterns and baseline wealth. We found higher wealth penalties for greater deviation and lower penalties for moderate deviation from the standard family pattern. Addressing entire family trajectories, our research extended and nuanced our knowledge of the role of earlier family behaviour for later economic wellbeing. By using personal-level rather than household-level wealth data, we were able to identify substantial gender differences in the study associations. Our research also recognised the importance of combining marital and childbearing histories to assess wealth inequalities.

Highlights

In the light of an ageing population and its increasing pressure on the welfare system, countries with generous social welfare systems such as Germany have increasingly emphasised personal responsibility and more market-based solutions to ensure economic wellbeing throughout one’s life (Ebbinghaus, 2015; Seeleib-Kaiser, 2016)
Building on the distance matrix resulting from the multichannel sequence analysis (MCSA), we identify the specific family patterns that are relevant in the study population to address the significance of the standard trajectory, and to identify consistent patterns that deviate from each other and assess the specific aspects of deviance
We describe the heterogeneity in family trajectories of study cohorts by clustering individual sequences in major family life course pathways

Summary

Introduction

In the light of an ageing population and its increasing pressure on the welfare system, countries with generous social welfare systems such as Germany have increasingly emphasised personal responsibility and more market-based solutions to ensure economic wellbeing throughout one’s life (Ebbinghaus, 2015; Seeleib-Kaiser, 2016). Personal savings and other private sources of wealth are increasingly relevant to the future living standards of the contemporary workforce. In the longer term, widening wealth disparities at older ages will increase reliance on welfare, hinder social cohesion, and contribute to rising economic inequality through the unequal intergenerational transmission of resources and opportunities (Pfeffer & Killewald, 2017; Pfeffer & Schoeni, 2016). Family roles—and transitions across these roles— have been recognised as relevant to socio-economic stratification and wealth inequality (e.g. Halpern-Manners et al, 2015; Hurd, 2002; McLanahan & Percheski, 2008; Zissimopoulos et al, 2015)

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