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Home tenure, stock market participation, and composition of the household portfolio

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Date
2016
Dewey
Microéconomie
Sujet
Housing; Portfolio choices; Stock market participation; Bivariate logistic model
JEL code
R.R2.R20; R.R2.R21; C.C3.C35
Journal issue
Journal of Housing Economics
Volume
32
Publication date
2016
Article pages
1-17
Publisher
Elsevier
DOI
http://dx.doi.org/10.1016/j.jhe.2016.03.002
URI
https://basepub.dauphine.fr/handle/123456789/15480
Collections
  • LEDa : Publications
Metadata
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Author
Beaubrun-Diant, Kevin
status unknown
Maury, Tristan-Pierre
111656 Edhec Business School
Type
Article accepté pour publication ou publié
Abstract (EN)
In this study, we empirically analyze the simultaneous decisions of households to participate in the stock market and/or own their home. A vast literature stream exists on decisions to buy or rent a home, and many contributions report the low participation rate of American households in the US stock market. Numerous authors have also provided evidence that home tenure (modeled as an exogenous variable) affects the share of household portfolios held as stocks. However, the present study is the first to allow decisions on homeownership and stockholding to be simultaneous and endogenous. We use a dynamic bivariate logistic panel data model on the Panel Study of Income Dynamics data from 1999 to 2007, controlling for sample selection bias and time-invariant unobserved heterogeneity. These estimates allow us to simulate the individual paths of homeownership and stockholding status over whole life cycles, according to household characteristics. Ceteris paribus, we show that households acquiring one asset (either home or stocks) acquire the other at an earlier stage in their life cycles, implying that some households become trapped in a no-stockholding, renting position.

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