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Labor market experiences and portfolio choice



Publishing details

Social Sciences Research Network

Authors / Editors

Knüpfer S;Rantapuska E;Sarvimäki M

Publication Year



Labor market experiences are a natural candidate for explaining heterogeneity in portfolio choice. However, identifying their impact is challenging, because unobservables can influence the events and circumstances people experience. We use plausibly exogenous variation in labor market conditions during the Finnish Great Depression in the early 1990s to trace the long-run impact of labor market experiences on portfolio choice. The results suggest that workers who experienced adverse labor market conditions are less likely to invest in various types of risky assets. This pattern is robust to a number of controls, including wealth and income, and it also is pervasive across different types of workers. The consequences of labor market experiences span generations: individuals whose parents have experienced adverse labor market conditions also avoid risky investments.


Portfolio choice; Stock market participation; Experiences; Unemployment


Social Sciences Research Network

Available on ECCH


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