Has Greater Stock Market Participation Increased Wealth Inequality in the US?
35 Pages Posted: 1 Jun 2005 Last revised: 19 Jan 2016
Date Written: October 31, 2015
Is wider access to stockholding opportunities related to reduced wealth inequality, given that it creates challenges for small and less sophisticated investors? Counterfactual analysis is used to study the influence of changes in the US stockholder pool and economic environment, on the distribution of stock and net household wealth during a period of dramatic increase in stock market participation. We uncover substantial shifts in stockholder pool composition, favoring smaller holdings during the 1990s upswing but larger holdings around the burst of the Internet bubble. We find no evidence that widening access to stocks was associated with reduced net wealth inequality.
Keywords: Household finance, stockholding, financial literacy, wealth distribution
JEL Classification: G11, E21, E44
Suggested Citation: Suggested Citation