The Evolution of Aggregate Stock Ownership---A Unified Explanation

Kristian Rydqvist, Joshua Spizman and Ilya Strebulaev

No 7356, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside a pension plan. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices.

Keywords: Bracket creep; capital gains tax; Income tax; Inflation; Pension funds; stock ownership (search for similar items in EconPapers)
JEL-codes: G10 G20 H22 H30 (search for similar items in EconPapers)
Date: 2009-07

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