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Limited Stock Market Participation Among Renters and Homeowners
Stockholm University, Faculty of Social Sciences, Department of Economics.
Number of Authors: 12019 (English)In: The Review of financial studies, ISSN 0893-9454, E-ISSN 1465-7368, Vol. 32, no 4, p. 1494-1535Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
2019. Vol. 32, no 4, p. 1494-1535
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:su:diva-170164DOI: 10.1093/rfs/hhy089ISI: 000469820300007OAI: oai:DiVA.org:su-170164DiVA, id: diva2:1333923
Available from: 2019-07-02 Created: 2019-07-02 Last updated: 2019-07-02Bibliographically approved

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