Parental Death in Childhood and Wealth Accumulation during Adulthood

Stéphane Benveniste, Ined
Marion Leturcq , Institut National d'Études Démographiques (INED)

This study investigates how parental death before age 15 is associated with wealth accumulation in adulthood (ages 30 to 69). We use data from five waves of the French wealth survey spanning from 2004 to 2021. Approximately 10% of individuals born in the 1930s-1980s experienced the premature death of a parent. Accounting for demographic characteristics and parental wealth, we identify a substantial median wealth penalty of €7,000 associated with childhood parental loss (for a median wealth of 70k€). Our research delves into the underlying mechanisms. We find that financial hardship in childhood and the associated reduction in educational attainment are among the major mediating determinants of the orphanhood wealth penalty, while labor market outcomes appear less important. Additionally, leveraging a feature of the French wealth survey, we are able to measure wealth at both the household and individual levels. We therefore examine gendered patterns and also find that those who lost a parent in childhood face higher couple instability especially divorcing more, which penalizes their wealth. Finally, differentiating between maternal and paternal death will further enrich our characterization of this adversity, drawing connections with the existing literature on the consequences of widowhood. This study sheds light on a previously unexplored aspect of wealth inequality by highlighting the enduring financial consequence of childhood parental loss.

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 Presented in Session 79. Till Death (or Divorce) do us Part