High earning families’ access to (grand)parental cash

As a footnote to this post on income distribution, here is a link to a briefing from Inequality Briefing, which argues that:

The highest earners are more likely to have received financial support from their parents

It adds:

The highest earners are 4 times more likely than the lowest to receive financial help from their parents – and when they do, they receive on average £8,000 more. The people who are the least in need of financial help from their parents are the most likely to get it. This is an additional layer of security for the children of richer families which likely helps them explore their career options and settle on what they really want to do – rather than having to take the first thing that comes along in order to pay the bills.

It provides as background:

The Attitudes to Inheritance Survey carried out in 2004 surveyed 2,000 people about their experiences of and attitudes towards inheritance. Overall 24% of people reported having received a “gift worth £500 or more” from their parents at some point in their lives. Removing the effect of age differences, the predicted probability of people in the highest income group (those earning £52,000 a year or more) having received a transfer was 48%. The predicted probability for those in the lowest income group (£5-10,000 per year) was 12%. Looking just at people who had received gifts, people in the highest income category on average reported receiving a lifetime total of £16,067. For people in the lowest income category this figure was £7,739.

So this is quite old data and the precise figures won’t be right for this year. Yet the basic point that students from higher income families are also likely to be coming from homes which benefit from other financial transfers – in this case, from their grandparents – is likely still to be true. These students are also much more likely either to leave university with no debt or to be able to bank their £4,750 annual student loan and use it for further financial security as they develop their careers, as argued elsewhere on this site.

The findings in this briefing reinforce that arrangements for student support which mean that students from the poorest backgrounds leave university with a disproportionately high share of the student debt burden  contribute to a pattern where this group enters the labour market at a disadvantage compared to graduates from better-off homes.

The same site has a variety of short notes on topics such as the decrease in social mobility in recent decades, the strong inequality in patterns of inheritance (which show an even more marked concentration in the population than gifts), income and wealth inequality in general and the impact of family income on children’s achievement.