Stone Center receives $4M grant to study wealth inequality and transmission in the U.S.

December 7, 2021

ANN ARBOR – Wealth inequality in the United States is rising and it plays a critical role in the intergenerational transfer of advantage. With support from a new grant award, the Stone Center for Inequality Dynamics is working to understand the key mechanisms that enable and drive inequality.

CID has received a $4 million grant to map the unequal distribution of wealth and opportunity across the United States. Over the next four years, CID will build a new data infrastructure that allows social scientists to study the geographic distribution of wealth, wealth inequality, and even its intergenerational persistence across the entire U.S. This 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, the CID research team 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 Fabian Pfeffer, founding director of the Stone Center for Inequality Dynamics in the Survey Research Center at the Institute for Social Research and principal investigator of the study.

“The creation and analysis of intergenerationally linked U.S. tax data has revolutionized the study of income inequality and mobility,” added Pablo Mitnik, research scientist at the Stone Center for Inequality Dynamics. “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 Survey Research Center at the Institute for Social Research. The Survey Research Center houses many of the nation’s leading social science data collections.

Contact:
Nicole Bonomini, bonomini@umich.edu