Intergenerational wealth transmission and mobility in Great Britain: what components of wealth matter?

The rapid widening of intergenerational wealth inequalities has led to sharp differences in living standards in Great Britain. Understanding which components of wealth are driving such inequalities is important for improving wealth and social mobility. Using the Wealth and Assets Survey we show the change in the intergenerational persistence in wealth in Great Britain is driven by inequality in offspring housing wealth. We estimate between 2010/12-2016/18 the intergenerational wealth elasticity in housing increased by 18 percentage points for individuals born to the same parental wealth background but born six years apart, and that offspring homeownership has become increasingly stratified by parental wealth even after controlling for individual’s own characteristics. We show by age 35 homeownership levels are three times higher among offspring whose parents are high educated homeowners compared to those whose parents are from a low educated renter background. In terms of housing wealth, by age 35 the former group holds approximately ten-times the level of housing wealth compared to the latter. We show such differences in housing wealth hold across the lifecycle and if maintained imply the intergenerational wealth elasticity in housing wealth is set to double in approximately one century. Taken together, our findings highlight the increasingly important role parental wealth has for determining whether offspring hold and the rate at which they accumulate particular types of wealth, and the implications for intergenerational wealth persistence, wealth mobility and inequality now and in the future.