Family values: inheritance, inequality and social mobility
Mar 3, 2025
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In this insightful discussion, Eliza Filby, a best-selling author of "Inheritocracy," and David Sturrock, a Senior Research Economist at the IFS, tackle the widening divide between baby boomers and younger generations. They explore how inheritance shapes social mobility, emphasizing the reliance of millennials and Gen Z on familial support for significant life milestones. The guests also dive into the implications of wealth concentration and the challenges of stagnant earnings, highlighting the urgent need for reforms to bridge the wealth gap and elevate opportunities for future generations.
The concentration of wealth among baby boomers has significantly reduced social mobility for younger generations, reversing recent advancements in economic opportunity.
The concept of inheritocracy highlights how familial financial support increasingly determines success, overshadowing traditional markers like education and hard work.
Deep dives
Wealth Disparities Across Generations
Wealth is increasingly concentrated among the baby boomer generation, resulting in a stark contrast between their financial stability and the economic struggles of younger generations, particularly Gen Z and millennials. This situation is worsened by stagnant wages for younger individuals, forcing many to rely heavily on parental financial support, especially when it comes to home ownership. Additionally, the baby boomers have accumulated significant assets, especially in housing, allowing them to provide substantial assistance to their children and extend their financial advantages across generations. This growing wealth divide underscores a shift from merit-based opportunities to inherited wealth, fundamentally altering what it means to achieve financial success today.
The Concept of Inheritocracy
Inheritocracy refers to a societal framework where access to wealth, mainly through parental support, becomes the most significant determinant of an individual's success rather than their educational or professional achievements. Many young adults today find their opportunities shaped less by their degrees and hard work than by their family's financial security. For instance, individuals who benefit from an affluent parental background are more likely to secure home ownership and pursue better career opportunities due to the financial backing they receive. This reliance on familial wealth creates a social divide, making it increasingly important for young people to consider their family’s financial status when planning for the future.
Impact on Social Mobility
The concentration of wealth among baby boomers has significantly stifled social mobility for younger generations, reversing the progress made over the last century. Research indicates that societal advancements in mobility have waned, with modern youths facing greater challenges in achieving economic success independently of their family's wealth. Consequently, those from less affluent backgrounds experience diminished prospects, perpetuating cycles of disadvantage and limiting opportunities to ascend the economic ladder. As jobs increasingly favor degree holders, many working-class individuals find themselves locked out of higher-paying positions, further exacerbating inequality.
Political and Economic Implications
The implications of inheritocracy extend beyond personal finances, prompting crucial discussions about taxation and government policies designed to address wealth inequality. Current tax structures, often favorable to older generations, make it politically challenging to implement reforms that might redistribute wealth more equitably. Moreover, the reliance on the 'bank of mom and dad' complicates the narrative surrounding intergenerational wealth transfer, with many young adults feeling both privileged and burdened by their dependence on parental support. As demographic shifts lead to a potential decline in the younger population, these systemic issues threaten to solidify the socioeconomic divides in society moving forward.
As baby boomers hold an increasing share of wealth, younger generations are finding it harder to build financial security, often relying on family support for major milestones like homeownership.
In her book Inheritocracy, Eliza Filby argues that – because of this – baby boomers have been good parents but not always great citizens.
To explore the issue, IFS Director Paul Johnson is joined by Eliza and David Sturrock, a Senior Research Economist at the IFS.
