scholarly journals Stock Market Participation, Portfolio Choice and Pensions over the Life-Cycle

2008 ◽  
Vol 2008 (64) ◽  
pp. 1-38 ◽  
Author(s):  
Steffan Ball ◽  
Keyword(s):  
Life Cycle ◽  
Stock Market ◽  
Portfolio Choice ◽  
Market Participation ◽  
Stock Market Participation

scholarly journals Limited Stock Market Participation Among Renters and Homeowners

2018 ◽  
Vol 32 (4) ◽  
pp. 1494-1535 ◽  
Author(s):  
Roine Vestman
Keyword(s):  
Stock Market ◽  
Portfolio Choice ◽  
Choice Model ◽  
Participation Rate ◽  
Housing Tenure ◽  
Preference Heterogeneity ◽  
Market Participation ◽  
Online Appendix ◽  
Stock Market Participation ◽  
Housing Tenure Choice

Abstract The stock market participation rate among homeowners is twice as high as among renters. This paper builds a life-cycle portfolio choice model with endogenous housing tenure choice. A stylized form of preference heterogeneity generates a substantial difference in participation rates. A majority of households have a large savings motive and choose to be homeowners and participate. A minority of households have a small savings motive and find it less worthwhile to participate. Fewer of these households become homeowners. Difference-in-difference regressions on panel data do not find evidence of a crowding-out effect of homeownership on participation, supporting the message that preference heterogeneity matters. Received January 25, 2017; editorial decision March 21, 2018 by Editor Wei Jiang. Authors have furnished an Online Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

scholarly journals Investment in financial literacy, social security, and portfolio choice

2014 ◽  
Vol 14 (4) ◽  
pp. 369-411 ◽  
Author(s):  
TULLIO JAPPELLI ◽  
MARIO PADULA
Keyword(s):  
Social Security ◽  
Stock Market ◽  
Portfolio Choice ◽  
Financial Literacy ◽  
Choice Model ◽  
Later Life ◽  
Optimal Investment ◽  
Risky Asset ◽  
Market Participation ◽  
Stock Market Participation

AbstractWe present an intertemporal portfolio choice model where individuals invest in financial literacy, save, allocate their wealth between a safe and a risky asset, and receive a pension when they retire. Financial literacy affects the excess return from and cost of stock-market participation. Investors simultaneously choose how much to save, their portfolio allocation, and the optimal investment in financial literacy. The model implies that one should observe a positive correlation between stock-market participation (and risky asset share, conditional on participation) and financial literacy, and a negative correlation between the generosity of the social security system and financial literacy. The model also implies that financial literacy accumulated early in life is positively correlated with the individual's wealth and portfolio allocations in later life. Using microeconomic cross-country data, we find support for these predictions.

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