Portfolio choices, Asset returns and wealth inequality: evidence from China

Shang-Jin Wei, Weixing Wu and Linwan Zhang

Emerging Markets Review, 2019, vol. 38, issue C, 423-437

Abstract: This paper empirically investigates the relationship between household porfolio choices and wealth distribution with micro-survey data in China. We show that due to decreasing relative risk aversion, the rich people tend to hold more complicated portfolios and own high-yield assets of stocks, housing and private businesses. As a result, the return for household portfolio increases with wealth, with the well-heeled gains more over the poor in the capital market. This therefore serves as a reason for wealth concentration and decrease of social mobility. Taxation on capital income slows down the growing process of inequality.

Keywords: Household portfolio; Wealth distribution; Inequality (search for similar items in EconPapers)
JEL-codes: D12 D31 G11 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:38:y:2019:i:c:p:423-437

DOI: 10.1016/j.ememar.2018.11.011

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