Has Greater Stock Market Participation Increased Wealth Inequality in the Us?

Is wider access to stockholding opportunities related to reduced wealth inequality, given that it creates challenges for small and less sophisticated investors? Counterfactual analysis is used to study the influence of changes in the U.S. stockholder pool and economic environment, on the distribution of stock and net household wealth during a period of dramatic increase in stock market participation. We uncover substantial shifts in stockholder pool composition, favoring smaller holdings during the 1990s upswing but larger holdings around the burst of the Internet bubble. We find no evidence that widening access to stocks was associated with reduced net wealth inequality.     

Risk management,housing and stockholding

This article investigates the possible explanations of the stockholding puzzle by focusing on housing and other uninsurable risks (associated with income, health and business). Taking the French household wealth survey (Patrimoine 2004, French National Statistical Institute), we find that the share of financial wealth invested in stocks depends on transaction and information costs, risk aversion, exposure to real estate risk and, to a lesser extent, labour market risk. These results are obtained by controlling for endogenous home ownership status.     

The Consequences of Having a Son on Family Wealth in Urban China

Due to the influence of traditional culture, housing is regarded as a status good and plays an important role in improving male competitiveness in the marriage market in China. Using data from a recent household survey, we find that urban families with a son are more likely to own a house, with a larger size, and at an earlier date. With the booming of the Chinese housing market since the late 1990s as background, having a son thus generates a substantial effect on family wealth through the channel of house ownership. Using the gender of the first‐born child as an instrument, our estimation shows that families with a son have 188 thousand RMB yuan higher housing wealth on average.     

Wealth effects on the housing markets: Do market liquidity and market states matter?

This paper analyzes the effect of household wealth (including housing and financial wealth) on housing sales and probes their long-run and short-run dynamic relationships. We further examine the short-run effect of financial wealth on housing sales by employing quantile regressions, restricted upon different liquidity (quantile) levels and up-down housing markets, from which the differences between the early and late stages of an uptrend/downtrend can be respectively exhibited. We find that housing wealth, income, and mortgage rates have long-run influences on housing sales. Looking at the short run, we find that housing sales only respond to housing wealth and mortgage rates. When we distinguish the effects of financial wealth on housing sales in up-down housing markets, we note a positive influence of financial wealth on housing sales in down markets, but not in up markets. Particularly, our results show an impact of housing liquidity on the short-run relationships.     

ESTIMATES OF HOUSEHOLD WEALTH INEQUALITY IN THE U.S., 1962–1983

The study has two major objectives. The first is to determine time trends in household wealth inequality in the U.S. over the 1962–83 period. Four concepts of wealth are analyzed: (i) total household wealth, defined as total household assets less liabilities; (ii) fungible wealth, defined as total household wealth less consumer durables and household inventories; (iii) financial wealth, defined as fungible wealth less equity in owner-occupied housing; and (iv) capital wealth, defined as financial wealth less currency, checking accounts, and time deposits. Relying on a variety of data sources, I find that wealth inequality remained relatively constant from about 1962 to 1973, fell sharply from about 1973 to about 1979, and then rose sharply between 1979 and 1983. Concentration in 1983 was greater than that in 1962 for financial and capital wealth but of similar magnitude for total and fungible wealth. The second, methodological in nature, is to analyze the effect on measured inequality of the alignment of raw survey data to national balance sheet totals. I find that the alignment process can significantly affect point estimates of household wealth distribution but does not generally affect the direction of inequality trends.     

Wealth in Latin America: Evidence from Chile,Colombia, Mexico and Uruguay

Drawing on recently-available microdata from financial surveys, this paper presents harmonized indicators for household wealth, its components, and its determinants in four Latin American countries (Chile, Colombia, Mexico and Uruguay), using Spain as a comparison benchmark. The paper analyzes the relationship between wealth indicators and sociodemographic characteristics of household heads (age, education, gender, marital status). For Uruguay, we are also able to analyze wealth patterns and intergenerational mobility (inheritance, family businesses and parental education).     

The Gender Wealth Gap in Europe: Application of Machine Learning to Predict Individual-level Wealth

This article provides comparative estimates of the gender wealth gaps for 22 European countries, employing data from the Household Finance and Consumption Survey. The data on wealth are collected at the household level, while individual-level data are needed for the estimates of gender wealth gaps. We propose a novel approach using machine learning and model averaging methods to predict individual-level wealth data for multi-person households. Our results suggest that random forest performs best as the predicting tool for this exercise, outperforming elastic net and Bayesian model averaging. The estimated gender wealth gaps tend to be in favor of men, especially at the top of the wealth distribution. Men have 24 percent more wealth than women on average. We also find that a high home ownership rate is associated with a smaller country-level gender wealth gap. Our estimates suggest that the individual-level wealth inequality is on average 3 pp higher than the household-level wealth inequality in multi-member households.     

Parental Wealth and the Black–White Mobility Gap in the U.S.

Utilizing longitudinal data from the Panel Study of Income Dynamics (PSID), this paper examines the relationship between parental wealth and intergenerational income mobility for black and white families. I find that total parental wealth is positively associated with upward mobility for low‐income white families, but is not associated with reduced likelihood of downward mobility for white families from the top half of the income distribution. Conversely, I find that total parental wealth does not have the same positive association for low‐income black families, while home ownership may have negative associations with the likelihood of upward mobility for these families. However, for black families from the top half of the income distribution, home equity is associated with a decreased likelihood of downward mobility, suggesting a heterogeneous relationship between home ownership and mobility for black families.     

Cognitive abilities and portfolio choice

We study the relation between cognitive abilities and stockholding using the recent Survey of Health, Ageing and Retirement in Europe (SHARE), which has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and retirement accounts. Since the decision to invest in less information-intensive assets (such as bonds) is less strongly related to cognitive abilities, we conclude that the association between cognitive abilities and stockholding is driven by information constraints, rather than by features of preferences or psychological traits.     

Determinants of women's financial inclusion: Evidence from India

A number of studies have analyzed the determinants of financial inclusion in India, but few if any have focused specifically on the factors that shape women's access to finance. This paper draws on the trove of women-specific data collected in the fourth round of the National Family Health Survey (NFHS-4), conducted in 2015–16 in India, to examine the factors that influence women's access to finance. The results indicate that while the forces that shape women's access to finance function at multiple levels, micro-level factors appear to be powerful drivers of inclusion. The analysis reveals that household-level economic indicators like wealth, gender of household head and their rural-urban location are crucial, but so are individual-level characteristics which explain approximately 83% of the variation in the multilevel regressions. Informal gender norms that govern women's mobility and economic activity crucially influence the ability of women to access loans and open bank accounts.     

A theory of gender differences in parental altruism

Abstract.  We offer a theory of gender differences in parental altruism based on the asymmetry that female fertility is constrained but male fertility is relatively unconstrained. Modelling human preferences as having been shaped during the Pleistocene, we derive evolutionarily stable, co‐evolved male and female preferences for altruism towards one's children. We demonstrate that there would be gender differences in parental altruism that depend on the relative abundance or scarcity of resources and the importance and substitutability of parental inputs in promoting the survival of offspring. The results point to greater altruism in females, under plausible conditions. JEL Classification: D64, J16, P46     

Portfolio Choice and Liquidity Constraints*

We study the infinite‐horizon model of household portfolio choice under liquidity constraints and revisit the portfolio specialization puzzle. We show why the puzzle is robust to several model variations, and argue that positive correlation between earnings shocks and stock returns is unlikely to provide an empirically plausible resolution. We find that relatively small fixed costs for stock market entry are sufficient to deter stockholding because, for a plausible range of parameter values, households can achieve desired consumption smoothing with small or zero holdings of stocks. Such costs could arise from informational considerations, sign‐up fees, and investor inertia.     

The gender gap in university enrolment: Do parents play a role beyond investing in skills?

Young men are far less likely than women to attend university across most OECD countries. I use data from the Youth in Transition Survey (YITS) to investigate this issue in the Canadian context, focusing on how parents might influence this gender gap. In particular, my goal is to isolate the incremental effect of parents’ valuations of education during the teenage years, holding constant the stock of skills acquired up to that point. To estimate this effect, I use a factor model based on a framework developed by Foley et al. (2014). My results confirm the importance of skills in determining the gender gap in university attendance. I also find that differences in the distribution of parental valuations of education account for 22% of the gender gap in the YITS data, pointing toward an important role that parents play, not accounted for in prior work.     

房地产正向财富效应形成的条件分析

房地产对居民消费的财富效应一直是关注的焦点。产生房地产财富正效应的条件为:城市居民二套住房拥有率要大于有潜在住房购买力的家庭占比率。我国应加大调控力度,降低房价,增加公共住房保障供给,大力发展适合中低收入阶层家庭的商品房项目。     

Analysis of School Enrollment in Ghana: A Sequential Approach

In this paper, we depart from the standard way of analyzing school enrollment by accounting explicitly for educational selectivity in order to examine the determinants of child school enrollment in Ghana. Using data from the Ghana Living Standard Survey round 6 (GLSS 6), we estimate a three‐step sequential logit model for the determinants of secondary school enrollment and its dependence on completing primary school. We find that family resources such as parental education, household income and the gender of the head of the household play a role in households' child schooling decisions. Educated parents are relatively more likely to enroll their children in primary school and keep them in school until they complete primary education. As well, we show that educated parents do not promote a gender‐biased investment in the schooling of children at the primary level. While household welfare does not influence children's entry into primary school importantly, their completion of primary school depends on household welfare. The study sheds more light on the pro‐male bias phenomenon regarding entry into primary school and primary school completion. Policies to promote the achievement of Sustainable Development Goal 4 in Ghana must be grade sensitive.     

The Structure and Distribution of Household Wealth in Australia

This article uses data from the second wave of the Household, Income and Labour Dynamics in Australia (or HILDA) Survey to provide an overview of the structure and distribution of household wealth in Australia. The data confirm that wealth is very unequally distributed, with the bottom half of the distribution owning less than 10 per cent of total household net worth, while the wealthiest 10 per cent account for 45 per cent. The article also includes an analysis of the factors associated with household wealth that indicates that wealth is significantly related to a range of factors including age, country of birth, parental occupational status, education, marital status, working hours, income, self‐reported savings behaviour, a willingness to take risks and even various lifestyle behaviours, such as smoking and alcohol consumption.     

健康变化对劳动供给和收入影响的实证分析

本文使用中国健康与营养调查(CHNS)数据检验了居民健康状况变化对居民劳动供给和家庭收入的影响。通过控制基期健康状况和一系列个人特征,本文重点检验了可以被视作外生冲击的健康变化对居民劳动供给和家庭收入的影响。考虑到城乡居民以及性别在劳动供给以及收入上的差异,本文还分别分城乡和性别进行了回归分析。研究发现,滞后期健康状况与当期劳动供给和家庭收入显著正相关;健康恶化显著降低劳动供给和家庭收入。此外,健康与劳动供给和家庭收入之间的关系在城乡居民和性别之间均存在差异,具体地,城市居民和男性更容易因健康恶化退出劳动供给,农村居民和女性则会因健康改善增加劳动供给。这表明在评估健康干预政策时要综合考虑健康变化对公民社会经济状况(SES)可能造成的影响,同时,对城市居民和农村居民以及对男性和女性要区别考虑。     

Do Germans Save to Leave an Estate? An Examination of the Bequest Motive

I investigate whether a bequest motive for savings influences the post-retirement wealth trajectories of German households. Two measures of the bequest motive are studied: the existence of children as the main group of potential heirs and the respondents' declared intention to bequeath. While having children has no significant impact on households' wealth trajectories, stated bequest intentions are associated with considerable heterogeneity in wealth holdings. The main conclusion from this study is that both the pure life-cycle model and the life-cycle model with bequest motives provide a valid basis for a theory of household wealth accumulation once the heterogeneity of preferences is acknowledged.
JEL classification : D 91; J 14     

A test of the household income process using consumption and wealth data

The evolution of household income can be explained almost equally well by rival models. However, rival models have very different implications for other household behaviours, such as consumption. I therefore test between two prominent models in the UK using panel data on consumption and wealth, as well as income, over 1991–2006. To operate the test, I show that long-lived income shocks transmit far less than one-for-one through to consumption, and particularly so for younger households. I then compare these estimates of transmission with estimates of households’ ability to smooth shocks, captured by the data on wealth. Conditional on the suitability of the consumption model, my estimates provide evidence against the restricted income process (RIP) and in favour of an alternative heterogeneous income process (HIP). This finding also explains why cross-sectional consumption inequality grew slowly over the period even though the variance of long-lived shocks was high. Finally, I conclude that it is important to consider mean reversion of shocks when constructing life-cycle consumption models.     

TRENDS IN AGGREGATE HOUSEHOLD WEALTH IN THE US., 1900–83

New estimates of aggregate household wealth for the U S. covering selected years in the period from 1900 to 1983 are presented. I find that marketable wealth per capita grew at 1.46 percent per year in real terms over the 1900–83 period, while real wealth per household grew at 0.81 percent per year. However, the growth rate was not uniform over the period, with the rates high during the 1900–29 and the 1949–69 periods, and slow during the other years. Moreover, real per capita wealth actually increased more slowly than real per capita disposable income and real per capita GNP over the century. I also find dramatic changes in the composition of household wealth over the century. In particular, both tangibles and fixed claim assets increased relative to total assets over the period from 1900 to 1983, while equities fell from about half to a quarter. Owner-occupied housing increased only moderately as a proportion of assets, from 17 percent in 1900 to 20 percent in 1983. Unincorporated business equity fell from over a third of total assets to 12 percent. Among financial assets, the biggest relative growth occurred in deposits in financial institutions, which grew from 8 percent in 1900 to 22 percent in 1983. Corporate stock had the most volatile behavior in the household portfolio, growing from 13 percent of total assets in 1900 to 27 percent in 1929, falling to 10 percent in 1949, rising to 22 percent in 1965, and then falling to 11 percent by 1983. Debt as a proportion of total assets rose from 5 percent in 1900 to 16 percent in 1983. Finally, both pension reserves and social security wealth increased relative to marketable assets from virtually zero in 1900 to 12 and 48 percent, respectively.