The Gender Wealth Gap in the United States

Abstract

While gender disparities in income have received much attention, much less is known about gender disparities in wealth, or the gender wealth gap. Wealth is an important measure of economic well-being that is distinct from income. Wealth provides a buffer when economic shocks like job loss occur and enables people to buy things that cost more than their income, retire with financial security, and pass down advantages to their children. It is important to understand whether men and women have equal access to this resource.

However, the gender wealth gap is difficult to measure in the United States because almost all U.S. surveys measure wealth at the household level. Since most households include both men and women, it is impossible to measure wealth by gender for most households. To address this issue, I construct person-level measures of wealth, which attribute to each person the assets and debts held in their own name, using nationally representative data from the Survey of Income and Program Participation (SIPP). Person-level measures of wealth allow me to compare the wealth of men and women regardless of who else lives in their households. I use person-level wealth to study the gender wealth gap in the United States in three empirical chapters.

The first empirical chapter examines trends in the gender wealth gap during the past three decades, expecting that the gender wealth gap may have narrowed due to narrowing gender gaps in income. I find that although the gender income gap is the primary source of the gender wealth gap, trends in the gender income gap and in the gender wealth gap are moving in opposite directions. The gender wealth gap has steadily widened, with women’s median wealth as a percentage of men’s median wealth dropping from 90% in the mid-1990s to 60% in the mid-2010s. The widening of the gender wealth gap cannot be explained by changes in basic demographic, family-related or labor market characteristics. The widening of the gender wealth gap is consistent, however, with increasing levels of wealth inequality in the United States.

The second empirical chapter focuses on gender disparities in financial assets between husbands and wives. Married couples are usually assumed to jointly own all their financial assets, regardless of who earns the money. It is possible, however, that married couples reproduce labor market disparities in their ownership of financial assets, allowing the higher earner to own more of the couple’s money. I find that regardless of whether the higher earner is the husband or the wife, the more a person earns relative to their spouse, the greater that person’s share of the couple’s financial assets. This occurs in part because the likelihood of being the only spouse with individually owned financial accounts increases with a person’s relative earnings. And even when spouses both own separate accounts, the higher earner holds more money in their accounts than the lower earner. The distribution of assets between spouses thus compounds the financial disadvantage of the lower-earning spouse.

The third empirical chapter examines how the size of the gender wealth gap evolves over the lifetime. The process of cumulative advantage suggests that if men hold slightly more wealth early in life, men may be able to accumulate wealth faster throughout the lifetime, leading to increasingly large gender wealth gaps with age. I find that over most of the lifetime, particularly during the prime working years, the size of the gender wealth gap widens. During the prime working years, the gender income gap explains the increasingly large gender wealth gap, while marriage helps equalize gender differences in wealth because women receive greater wealth benefits from marriage than men. By retirement age, men own considerably more wealth than women, even though women tend to live longer and thus need more resources in old age.