Inequality of opportunity and household risky asset investment: Evidence from panel data in China

Yang Song, Weixing Wu and Guangsu Zhou

China Economic Review, 2020, vol. 63, issue C

Abstract: Based on the household panel data over three waves in China, this paper investigates how inequality of opportunity of a region affects household risky asset investment. The empirical results show that inequality of opportunity raises both the probability and the share of household risky asset investment in the region. Our key results are robust to a series of sensitivity checks. The heterogeneity analyses tell us that richer and more educated households seem to be affected more by inequality of opportunity of the county they reside in. The paper also tests several possible channels behind the observed relationship, showing that the following channels help bring upon this effect: increasing material aspiration, changing risk preferences, and reducing household expenditures.

Keywords: Income inequality; Inequality of opportunity; Risky asset investment; Stock market participation (search for similar items in EconPapers)
JEL-codes: D31 D63 G11 O53 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:63:y:2020:i:c:s1043951x20301103

DOI: 10.1016/j.chieco.2020.101513

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