Clustering Fosters Investment: Local Agglomeration and Household Portfolio Choice
34 Pages Posted: 31 Jan 2017 Last revised: 5 Dec 2018
Date Written: November 30, 2018
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: Suggested Citation