Clustering Fosters Investment: Local Agglomeration and Household Portfolio Choice

48 Pages Posted: 6 Nov 2019 Last revised: 8 Mar 2021

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 - Department of Finance

George M. Korniotis

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

Date Written: March 8, 2021

Abstract

We investigate the impact of local agglomeration economies on household portfolio choice. Using detailed location and employment data from two U.S. household surveys, we document that individuals who work in locally agglomerated industries are more likely to invest in risky assets. This pattern is best explained by industry clusters enhancing human capital among local industry workers and in turn, amplifying their effective risk tolerance. Our findings highlight the complex role of geography 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 (March 8, 2021). 9th Miami Behavioral Finance Conference 2018, University of Miami Business School Research Paper No. 2909168, 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 - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

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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