Clustering Fosters Investment: Local Agglomeration and Household Portfolio Choice

34 Pages Posted: 31 Jan 2017 Last revised: 5 Dec 2018

See all articles by Jawad M. Addoum

Jawad M. Addoum

Cornell University

Stefanos Delikouras

University of Miami - Department of Finance

Da Ke

University of South Carolina

George M. Korniotis

University of Miami; Miami Business School; University of Miami - Behavioral Decision Making Cluster

Date Written: November 30, 2018

Abstract

We investigate the impact of local agglomeration economies on household portfolio decisions. Using data from two U.S. household surveys, we document that individuals who work in locally agglomerated industries increase their risky asset holdings and are more likely to invest in the stock market. We also find that the agglomeration effect on household asset allocation mainly operates through the human capital channel. Our analysis highlights the interaction between geography and local labor market conditions in shaping household financial decisions.

Keywords: local agglomeration, household portfolio choice, human capital

JEL Classification: G11, J24, R23

Suggested Citation

Addoum, Jawad M. and Delikouras, Stefanos and Ke, Da and Korniotis, George M., Clustering Fosters Investment: Local Agglomeration and Household Portfolio Choice (November 30, 2018). Available at SSRN: https://ssrn.com/abstract=2909168 or http://dx.doi.org/10.2139/ssrn.2909168

Jawad M. Addoum

Cornell University ( email )

Ithaca, NY 14853
United States

Stefanos Delikouras

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Da Ke

University of South Carolina ( email )

1014 Greene Street
Columbia, SC 29208
United States
(803) 576-5701 (Phone)

HOME PAGE: http://www.dakefinance.com

George M. Korniotis (Contact Author)

University of Miami ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Miami Business School ( email )

University of Miami - Behavioral Decision Making Cluster ( email )

5250 University Drive
Coral Gables, FL 33124
United States

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