Does the “iron rice bowl” increase household financial risk-taking? Evidence from China

In China, tenured positions are commonly referred to as the “iron rice bowl”, denoting their job stability and lifelong employment benefits. Using data from the China Family Panel Studies (CFPS), this study examines the influence of holding an “iron rice bowl” on household investment behavior. The results indicate that tenured positions significantly encourage household participation in risky financial markets and increase the share of risky assets in household portfolios. Mechanism analysis suggests that this effect operates primarily through three channels: enhancing job security, accumulating social capital, and improving digital skills. Heterogeneity analysis further reveals that the role of tenured positions varies with the level of regional financial development. The marginal effect of tenured positions on participation in risky financial markets is stronger in eastern China, while their relative contribution to the intensity of risky asset allocation is greater in the central and western regions. Additional heterogeneity tests show stronger effects among families without mortgage burdens and those with lower medical expenditures. Further risk-return analysis shows that although households with more tenured positions bear significantly higher return volatility, they do not achieve higher returns or improved Sharpe ratios. This study provides empirical evidence on how tenured positions influence household financial decision-making. It also offers policy insights for strengthening social security and promoting financial literacy.