The Link between Family Structure and Wealth Is Weaker Than You Might Think

William Emmons and Lowell Ricketts of the St. Louis Fed:

The Link between Family Structure and Wealth Is Weaker Than You Might Think: …While there is an overall correlation between, say, two-parent families and higher wealth, research presented at the symposium found that this link actually is inconsistent across racial and ethnic groups and quite weak in a causal sense.

Spurious Connections

In a nutshell, when we focus on family-structure differences within racial or ethnic groups, rather than between groups, there is essentially no relationship at all. Our interpretation is that any correlation between family structure and wealth that exists in aggregate data is largely spurious. That is, it reflects deeply rooted structural, systemic or other unobservable factors that differ across races and ethnicities.

These “deep” causes of differences in both family structure and wealth accumulation could include:

• The continuing effects of past discrimination
• Segregation in housing, health care and education
• Environmental, epigenetic (that is, suppressed expression of true genetic abilities) or cultural factors that differentially affect early-childhood development

We concluded that family-structure differences are a symptom of deeper driving forces, not an important cause per se of wealth differences. One implication is that, even if we could change patterns of marriage and child-bearing among many people, this alone would be unlikely to affect racial and ethnic wealth gaps very much, if at all. …