America’s richest families in the Gilded Age were not a closed club. Most of the very wealthy dropped out of the top tier within a decade, and the vast majority of their grandchildren never made it back.
That is the main result of a working paper by Priti Kalsi of the Rochester Institute of Technology and Zachary Ward of Baylor University. It was issued on January 13, 2025, as NBER Working Paper No. 33355.
The authors set out to answer a question that has become pressing again as wealth concentration returns to levels last seen in that era: is the top of the wealth distribution a fixed set of families, or does it churn?
Tens of millions of people, followed across censuses
Modern wealth surveys are too small or too short to track the top 1% across generations. So the pair turned to full-count US census records from 1850 to 1940, linked person to person using a new resource called the Census Tree.
That produced three datasets: about 85 million people followed over ten years, 34 million children linked to their parents, and nearly 15 million grandchildren linked to both parents and grandparents. The authors call the last one the largest three-generation sample they know of.
Wealth was proxied by the real estate and personal property values the census recorded in 1850 to 1870 and home values in 1930 and 1940. To cover the gap in the middle of the Gilded Age, they used a telling marker of status: whether a household had several live-in servants, which only 0.1% to 0.6% of households did.
Most of the rich fell out within a decade
About 85% of people in the top 0.1% had dropped out of that group ten years later, and 72% of those in the top 1% had fallen out of it. The servant measure told the same story: 71% of households with multiple servants in one census no longer had them in the next.
Across generations the churn was even starker. Some 93% of grandchildren whose grandfather was in the top 1% were not in the top 1% themselves. Even when both the paternal and maternal grandfathers were in the top 1%, 86% of grandchildren were not.
Only 3.1% of grandchildren of top 0.1% grandfathers stayed in that elite slice.
A very rich grandfather still helped a lot
That does not mean family wealth was irrelevant. The link between a grandfather’s rank and a grandchild reaching the top 1% was weak across most of the distribution, then rose steeply at the very top.
Among descendants of top 0.1% grandfathers, 13.5% reached the top 1%, compared with only 4% of descendants of 98th percentile grandfathers. In the authors’ words, “it helps to have a filthy rich grandfather rather than a merely rich one.” The same sharp curve showed up for top-coded wages and college degrees in 1940.
The authors caution that historical property reports are noisy and could overstate turnover. They ran a battery of checks, including averaging neighbours’ wealth and keeping only households where several members could be linked, and the high churn held. It is also in line with Norwegian data showing only 17% of the top 1% still there decades later.
Their explanation is that exceptional fortunes often come from rare entrepreneurial talent or luck, which do not pass reliably to descendants, and that heirs may spend or give away much of the money. The churn happened in an era when mobility for the population as a whole was low.
Study Details:
- Title: The Gilded Age and Beyond: The Persistence of Elite Wealth in American History
- Authors: Priti Kalsi, Zachary Ward
- Journal: NBER Working Paper No. 33355
- Publication Date: January 13, 2025
- DOI: 10.3386/w33355