Disability and the widening gap in mid-life wealth accumulation: A longitudinal examination

Research suggests that persons living with a disability are disadvantaged in terms of employment outcomes and experience greater economic vulnerability. Despite our understanding of wealth inequality in later life as the result of an accumulative process of resource acquisition that occurs across the life course, conclusions about economic inequality associated with disability are mainly based on cross-sectional research or very short-term panel studies. In this paper, we examine the extent to which work disability in mid-life creates a cumulative disadvantage in wealth accumulation that grows with age. Using long-term longitudinal data from the Panel Study of Income Dynamics (PSID), we follow respondents from their 40 s into their 60 s to understand the relationship between work disability and wealth accumulation over time. Growth curve models include two specifications of trajectories of household wealth accumulation; as a function of time-varying work disability and also as a function of cumulative exposure to work disability in mid-life. Although both specifications indicate a disability penalty to wealth accumulation, the cumulative exposure model shows that initial wealth disparities associated with disability grow substantially with age, resulting in a widening gap in household wealth at the threshold of traditional retirement age for those with histories of temporary or persistent work disability in midlife.