Financial wealth and early income mobility

We study the interaction between financial wealth and early income growth. Using banking data on career starters in Belgium, we find higher income growth for individuals with higher financial wealth as early as 3 years into a career. While the roles of social capital and innate abilities appear limited, our results suggest that individuals with higher disposable wealth are more likely to find a job matching their human capital, in turn, boosting their chances of higher performance and consequent income growth. Policies addressing individuals' capacity to accommodate frictions in the market for first jobs could therefore substantially promote economic mobility.

Automated summary

This article examines the relationship between financial wealth and early income growth. The study finds that individuals with higher financial wealth experience higher income growth in the early stages of their careers. While social capital and innate abilities play limited roles, the results suggest that individuals with higher disposable wealth are more likely to find jobs that match their human capital, leading to higher performance and consequent income growth. Therefore, implementing policies that address individuals' capacity to navigate frictions in the first job market could significantly promote economic mobility.