The role of labor-income risk in household risk-taking
- In fifteen European countries, China, and the US, stocks and business equity as a share of total household assets are represented by an increasing and convex function of income/wealth. A parsimonious model fitted to the data shows why background labor- income risk can explain much of this risk-taking pattern. Uncontrollable labor-income risk stresses middle-income households more because labor income is a larger fraction of their total lifetime resources compared with the rich. In response, middle-income households re-duce (controllable) financial risk. Richer households, having less pressure, can afford more risk-taking. The poor take low risk because they avoid jeopardizing their subsistence consumption.
Author: | Sylwia Hubar, Christos Koulovatianos, Jian Li |
---|---|
URN: | urn:nbn:de:hebis:30:3-534571 |
URL: | https://ssrn.com/abstract=3660935 |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 640 |
Series (Serial Number): | CFS working paper series (640) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Contributor(s): | Richard Rogerson |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2020 |
Year of first Publication: | 2020 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2020/07/27 |
Tag: | background risk; business equity; household-portfolio shares; subsistence consumption; wealth inequality |
Issue: | June 28, 2020 |
Page Number: | 119 |
HeBIS-PPN: | 467547211 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |