Chiseling a Notch Out of the Next Generation's Assets: The Effect of the Social Security Amendments of 1972 and 1977 on Intergenerational Transfer Behavior

Jeremy G. Moulton, University of California, Davis

This paper investigates intergenerational wealth transmission between fathers and children using the 1972 and 1977 Amendments to the Social Security Act. These amendments created two successive cohorts; the first experienced increased growth in Social Security benefits and the second experienced a negative shock and has been deemed the Notch Generation. Using the Health and Retirement Study, I find that sons with fathers born in the Notch Generation have significantly lower wealth levels than those with fathers born in surrounding cohorts, most notably the cohort just prior. Further evidence suggests that the wealth difference is likely due to a higher probability of providing financial support to parents and a lower probability of receiving an inheritance and financial assistance from parents.