Young adults with wealthiest parents are six times better off than poorest
Research by the Institute for Fiscal Studies (IFS) found people with wealthy parents are much more likely to be wealthy themselves, to be homeowners and to be high earners.
When people born in the 1970s and 1980s were in their 30s, those with parents in the wealthiest fifth in their generation had an average net wealth – excluding pension wealth – of £107,000.
Those with parents in the poorest fifth had on average £18,000.
The children of wealthier parents are significantly more likely to be homeowners by the age of 30 – 65 per cent for those with parents in the top third of the wealth distribution against 56 per cent and 41 per cent for those whose parents were in the middle and bottom thirds, respectively.
Even among those whose parents have the same levels of earnings and education, those with wealthier parents tend to earn more.
And those with wealthier parents save more as a portion of their earnings and are more likely to hold higher-risk, higher-return investments such as stocks and shares, the research found.
David Sturrock, a senior research economist at the IFS, said: “These findings emphasise the importance of considering wealth – both as a resource that parents may use to transmit economic advantages to their children, and as a measure of the economic resources and security of young adults – when trying to promote social mobility.
“Policies that seek to improve educational progression and labour market outcomes for those with low-education and low-income parents could, if designed and implemented well, be important for wealth mobility but would not on their own equalise wealth outcomes between those with wealthier and poorer parents.
“A significant amount of the inequalities in wealth by parental background appear to be due to other channels through which parents transmit advantages to their children.”