Social impact of ’Bank of Mum and Dad’ growing year-on-year

New analysis from Ricky Kanabar and Paul Gregg highlights the growing importance of family background in explaining wealth inequalities in Great Britain. Last updated on Thursday 5 August 2021 - A growing gulf between the haves and have-nots in Britain means that parental wealth today matters more than at any point in the past when it comes to explaining differences in offspring wealth. The analysis from social policy experts at the University of Bath suggests that around 35% of wealth differences in the parent generation pass onto their offspring and this relationship is only getting stronger in Britain. The research used the Wealth and Assets Survey to estimate the intergenerational wealth elasticity (IWE) - a metric which quantifies the association between parent and offspring wealth. Analysing the data between 2010 and 2018, the authors found the IWE is growing by over 6 percentage points every decade. The findings imply that individuals in their late 20s and early 30s will exhibit far higher levels of wealth inequality at retirement age, compared to those observed today. Younger cohorts born from 1968 onwards have higher levels of 'cross-generational persistence' in wealth than those aged in their 60s (born before 1952).