Methods: Longitudinal data on 991 households drawn from the National Longitudinal Survey of Youths 1979 Mother and Child datasets was used in this study. This paper uses growth mixture models to explore the asset accumulation patterns of families with young children, as well as identify the determinants of membership in the various asset accumulation trajectories. To adjust for non-independence of observations for children belonging to the same household, the children were clustered by their mothers.
Results: Examining the net worth of households using growth mixture modeling techniques, four distinct asset accumulation trajectories are identified. The vast majority of households (78%) belong to the trajectory class that started with low initial net worth, and which experienced non-significant growth in assets over time (LS). Another 4% of households have a slightly higher initial level of assets, but has a significant growth pattern over time (LA). About 12% of households belong to the third asset trajectory class where members have initial levels of assets that are significantly higher than zero, but with non-significant asset growth trends over time (HS). The remaining 6% of households have significantly higher initial level of assets and with significant growth trends over time (HA). Among factors that predict asset accumulation trajectory class membership include the age of mothers at time of child birth (e.g. older mothers have 1.5 times odds of belonging to HA or HS classes than the LS class), and race, with non-Black/non-Hispanic mothers having 12.5 times the odds of belonging to the HA class compared to their African-American counterparts.
Conclusions and implications: There is much heterogeneity in the asset accumulation experience, with 4 trajectory classes identified in this study. Consistent with prior research, the results indicate various socio-economic and demographic characteristics to be associated with the rate of wealth accumulation within families. Predictors of membership in the various asset accumulation trajectory classes are presented, and the implications for practice, research and policies promoting asset accumulation are discussed.