Brits born into wealthy families twice as likely to become high earners

Brits born into wealthy families are at least twice as likely to take home high pay packets compared to people born into poorer families, according to fresh figures released today. 

Research conducted by the think tank, Institute for Fiscal Studies, shows one in five Brits with parents in the wealthiest fifth of the population earn over £40,000. This compared with one in ten of people who have parents in the second-wealthiest fifth.

The IFS study, titled Why do wealthy parents have wealthy children?, and funded by the Economic and Social Research Council, found having wealthy parents is more important in determining younger generations’ wealth than having parents who earn a lot.

30 year olds born in the 1970s and 80s with parents in the top fifth of the wealth distribution had an average estate value of £107,000, around six times higher than the £18,000 of wealth held by Brits whose parents are in the poorest fifth.

Becoming richer is dependent on having wealthy parents, according to the IFS. Children of the wealthiest fifth of parents are almost three times as likely to be in the wealthiest fifth within their generation compared to people who have parents with average wealth levels.

David Sturrock, a senior research economist and author of the report, said: “‘These findings emphasise the importance of considering wealth – both as a resource that parents may use to transmit economic advantages to their children, and as a measure of the economic resources and security of young adults – when trying to promote social mobility.”

Across all wealth cohorts, housing represents the largest proportion of Brits’ wealth, the IFS’s research shows. This is likely to have increased since the onset of the Covid crisis, due to house prices soaring 11 per cent annually.

The IFS report found having wealthy parents is more important than having parents who have high incomes when it comes to children building their own estates.

Educational attainment is also highly dependent on whether childrens’ parents are wealthy.

Those with parents in the wealthiest fifth are four times as likely to have a high level of education as those with parents in the poorest fifth. However, wealth is more of a determining factor on children’s earnings compared to education, the IFS said.