Speaker: Guozhong Zhu,Assistant Professor, Guanghua School of Management, Peking University
Host: Jin Zhang, Associate Professor, RIEM
Time: 14:30--16:00, Friday, Dec.12
Venue: H515 Yide Hall, Liulin Campus
Abstract: This paper studies household nancial choices: why are these decisions dependent on the education level of the household? A life-cycle model is constructed to understand a rich set of facts about decisions of households with dierent levels of educational attainment regarding stock market participation, the stock share in wealth,the stock adjustment rate and the wealth-income ratio. Model parameters, including preferences, the cost of stock market participation and portfolio adjustment costs, are estimated to match the nancial decisions of dierent education groups. Based on the estimated model, education aects household nance mainly through increased average income. The estimation also nds evidence that higher educational attainment is associated with a lower stock market entry cost and a larger discount factor. Education specic dierences in income risks,medical expenses, mortality risks and the life-cycle pattern of income explain relatively little of the observed dierences in household nancial choices.
