U-M receives $4M to study U.S. wealth inequality, transmission

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Wealth inequality in the United States is rising and plays a critical role in the intergenerational transfer of advantage.

A University of Michigan research team at the Stone Center for Inequality Dynamics has received a $4 million grant to map the unequal distribution of wealth and opportunity across the United States. The team will build a new data infrastructure that allows social scientists to study the geographic distribution of wealth, wealth inequality and its intergenerational persistence across the country.

The work is being funded by the Bill & Melinda Gates Foundation, with additional support from the Stone Foundation.

By analyzing anonymized, individual-level IRS tax records in combination with other large administrative data sources, such as residential real estate property records, Fabian Pfeffer and his U-M colleagues will create proxy measures of wealth for all U.S. taxpayers and link them across generations.

“Our project will provide new data on the geographic variation of wealth, wealth inequality and wealth mobility to significantly expand our understanding of local variation in inequality and mobility, which so far has been mostly derived from income-based comparisons,” said Pfeffer, founding director of the Stone Center and principal investigator of the study.

The Stone Center is in the Survey Research Center at U-M’s Institute for Social Research. Pfeffer is a research associate professor in the SRC and an associate professor of sociology in LSA.

“The creation and analysis of intergenerationally linked U.S. tax data has revolutionized the study of income inequality and mobility,” said Pablo Mitnik, research scientist at the Stone Center. “We will build on this scientific breakthrough to expand our understanding of the differences between income and wealth.”

While most prior efforts to derive wealth measures from U.S. tax records have been focused on the very wealthy, this project also seeks to capture wealth across all levels. Housing wealth is central to this task as it constitutes the main asset held by a large share of U.S. households. The resulting data will eventually help researchers address questions related to the geographic influences that are unique to wealth, such as local housing markets.

“We expect large variation in wealth across the U.S. and hope that our data prompt a broad set of researchers to investigate entirely new aspects of the geography of inequality in this country,” said Robert Manduca, assistant professor of sociology and project member.

As one of the largest and broadest studies of wealth in America, this study will create a publicly available database of wealth estimates for all U.S. localities. To support a user-friendly presentation of data, the team will collaborate with data visualization experts to build an interactive online platform that will ensure broad access to the data by other researchers, decision-makers, and the public.

“We’re very grateful to the Bill & Melinda Gates Foundation as its support allows for the expansion of a critical social scientific data infrastructure,” said Matthew Shapiro, director of the SRC, which houses many of the nation’s leading social science data collections.

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