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Local Agglomeration and Stock Market Participation

40 Pages Posted: 31 Jan 2017 Last revised: 19 Jul 2017

Jawad M. Addoum

Cornell University

Stefanos Delikouras

University of Miami

Da Ke

University of South Carolina

George M. Korniotis

University of Miami

Date Written: July 18, 2017


We study the impact of local agglomeration economies on stock market participation. Using multiple datasets, we find that when the industry in which individuals work is locally agglomerated, they are more likely to participate in the stock market and, conditional on participation, allocate more to stocks. Further, we show that this relationship is especially strong among skilled workers. We find that the local agglomeration effect is not explained by risk tolerance, worker inertia, or a preference for stocks of firms that are in the same industry as the worker. Instead, our findings are consistent with local agglomeration enhancing human capital and in turn, raising workers' optimal allocations to risky assets. More generally, our analysis underscores the role of geography in shaping human capital and household financial decisions.

Keywords: human capital, portfolio decisions, household finance

JEL Classification: G11, J24, R23

Suggested Citation

Addoum, Jawad M. and Delikouras, Stefanos and Ke, Da and Korniotis, George M., Local Agglomeration and Stock Market Participation (July 18, 2017). Available at SSRN:

Jawad Addoum

Cornell University ( email )

Ithaca, NY 14853
United States

Stefanos Delikouras

University of Miami ( email )

Coral Gables, FL 33124
United States

Da Ke

University of South Carolina ( email )

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


George Korniotis (Contact Author)

University of Miami ( email )

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

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