Wealth, Savings and Children Among Swiss, German and Australian Families

Abstract

Although sociologists pay increasing attention to wealth, we know very little about the relationship between children and wealth accumulation. Using the information on wealth from panel surveys (the Swiss Household Panel, the Household of Income and Labour Dynamics in Australia and the German Socio-Economic Panel), we study families’ wealth accumulation in different social and political settings. This contribution tests how children affect the propensity to save and net worth. It also addresses anticipation effects when individuals plan to have a child. The results from fixed effects models show that dependent children reduce the probability to save, whereas planning for a child increases the probability to save. To test whether lower or higher expenditure is responsible for lower saving probability, we estimate models with earned income and labour supply as mediator variables. Small children are found to reduce saving mostly through income losses, and older children reduce saving through higher expenditures. In the long run, children have moderate negative consequences on wealth accumulation in all countries (6714 CHF per grown-up child in Switzerland, 15,462 AU$ in Australia, and 619 EUR in Germany).