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Stock Market Participation: The Role Of Human Capital

Author

Listed:
  • Kartik Athreya

    (Federal Reserve Bank Richmond)

  • Felicia Ionescu

    (Federal Reserve Board)

  • Urvi Neelakantan

    (Centre for Advanced Financial Research and Learning (CAFRAL))

Abstract

Human capital investment is significant for most individuals, while stock market participation is limited, especially early in life. Returns to human capital depend on individual traits and will, for some, dominate returns to stocks. We demonstrate that heterogeneity in human capital returns, when empirically disciplined, explains well why many do not invest in stocks, especially when young. Our results also suggest that it is short sales constraints on stocks, and not borrowing constraints, that limit engagement with the stock market.

Suggested Citation

  • Kartik Athreya & Felicia Ionescu & Urvi Neelakantan, 2018. "Stock Market Participation: The Role Of Human Capital," Working Papers 022316, Centre for Advanced Financial Research and Learning (CAFRAL).
    • Handle: RePEc:ris:cafral:022316
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    Cited by:

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    2. Kamila Duraj & Daniela Grunow & Michael Haliassos & Christine Laudenbach & Stephan Siegel, 2025. "Rethinking the Stock Market Participation Puzzle: A Qualitative Approach," CESifo Working Paper Series 11980, CESifo.
    3. Duraj, Kamila & Grunow, Daniela & Chaliasos, Michael & Laudenbach, Christine & Siegel, Stephan, 2024. "Rethinking the stock market participation puzzle: A qualitative approach," SAFE Working Paper Series 441, Leibniz Institute for Financial Research SAFE.
    4. Kartik Athreya & Felicia Ionescu & Ivan Vidangos & Urvi Neelakantan, 2018. "Investment Opportunities and Economic Outcomes: Who Benefits From College and the Stock Market?," 2018 Meeting Papers 1151, Society for Economic Dynamics.
    5. Yongsung Chang & Jay Hong & Marios Karabarbounis & Yicheng Wang & Tao Zhang, 2022. "Income Volatility and Portfolio Choices," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 65-90, April.
    6. Cheng, Tzu-Chang Forrest & Huang, Hsuan-Hua & Lin, Tse-Chun & Yang, Tzu-Ting & Zhu, Jian-Da, 2025. "Windfall gains and stock market participation: Evidence from shopping receipt lottery," Journal of Banking & Finance, Elsevier, vol. 172(C).
    7. Duraj, Kamila & Grunow, Daniela & Chaliasos, Michael & Laudenbach, Christine & Siegel, Stephan, 2024. "Rethinking the stock market participation puzzle: A qualitative approach," IMFS Working Paper Series 210, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    8. Kartik B. Athreya & Felicia Ionescu & Urvi Neelakantan & Ivan Vidangos, 2020. "Who Values Access to College?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue 20-03, pages 1-5, March.
    9. Li, Mingzhe, 2025. "A Theory of Portfolio Choice for Heterogeneous Investors," MPRA Paper 126642, University Library of Munich, Germany, revised 29 Oct 2025.
    10. Li, Qinghai & Li, Hao & Li, Qian, 2025. "Can financial consumer protection promote residents' stock market participation? An investigation based on eastern China residents survey," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).

    More about this item

    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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