Abstract
ABSTRACTIs there a reciprocal relationship between household income and net worth and does that relationship depend on initial income? Using cross-lagged panel models of household income and net worth data from the Panel Study of Income Dynamics, the authors compare the income-wealth relationships of high- and low-income households from 1989 to 2011. Adjusting for demographic differences, the authors find a reciprocal relationship between income and wealth for high-, but not low-, income households. Results suggest intragenerational mobility works differently by initial income, which could partially explain the difficulty of escaping poverty and low U.S. support for liberal social welfare policy.
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