Article (Scientific journals)
The role of labor-income risk in household risk-taking
Hubar, Sylwia; KOULOVATIANOS, Christos; Li, Jian
2020In European Economic Review, 129 (C)
Peer reviewed
 

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Keywords :
Background risk; Household-portfolio shares; Business equity; Subsistence consumption; Wealth inequality
Abstract :
[en] 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 reduce (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.
Disciplines :
Finance
Author, co-author :
Hubar, Sylwia;  Natixis > Economic Research
KOULOVATIANOS, Christos  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)
Li, Jian;  Zhejiang Gongshang University, > School of Finance and International Business School
External co-authors :
yes
Language :
English
Title :
The role of labor-income risk in household risk-taking
Publication date :
2020
Journal title :
European Economic Review
ISSN :
0014-2921
Publisher :
Elsevier, Amsterdam, Netherlands
Volume :
129
Issue :
C
Peer reviewed :
Peer reviewed
Available on ORBilu :
since 30 October 2020

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