Research

Abstract: We exploit a policy reform that exogenously deteriorates mothers' job prospects. China switched from a one-child policy to two-child in 2016, which increased female workers' childbearing and caring responsibilities. Using a leading peer-to-peer lending platform targeting college students in China, we find that loan applications from female college students decrease by 15.6% relative to male students after the reform. The drop suggests that female students can anticipate the poorer future job prospects; they reduce their borrowing and invest less in human capital accordingly. Applications for long-term and large-amount loans and loans for human capital investment purposes experience the largest decline. We also find that loan applications decrease after provincial governments' staggered extension of maternity leaves and that the decrease is more prominent when the expected motherhood penalty is greater. The results are unlikely driven by credit supply channels.

Abstract: By leveraging US state-level employment protection laws, we provide evidence that such laws increase stock market participation, on both intensive and extensive margins. Young, low-income, low-wealth, and less-educated households exhibit stronger effects. Conversely, when the protection law is reversed, we observe the opposite risk-taking behaviors. Our findings remain robust across various stock market participation measures, datasets, and stacked difference-in-differences research designs, underscoring the significance of employment protection in encouraging households to take financial risks, and potentially enhancing wealth accumulation. This represents a novel economic channel through which employment protection can benefit households.

Abstract: This paper studies a novel channel through which climate risks affect households’ choices of risky asset allocation: a stringent climate change regulation elevates labor income risk for households employed by high-emission industries which in turn discourages households' financial risk-taking. Using staggered adoptions of climate change action plans across states, we find that climate change action plans lead to a reduction in the share of risky assets by 15% for households in high-emission industries. We also find a reduction in risky asset holdings after the stringent EPA regulation. These results are stronger with experiences of climate change-related disasters. Our study implies an unintended consequence of climate regulations for wealth inequality by discouraging low-wealth households' financial risk-taking.

Abstract: This paper proposes a novel channel for households’ risky asset allocation: better intrahousehold risk-sharing reduces overall labor income risk for dual-earner couples, thus encouraging households’ financial risk-taking. Capturing intra-household risk-sharing dynamics using the conditional income correlation between spouses’ industries, we find that better income risk-sharing within couples increases households’ financial risk-taking. Exploiting unexpected events of spousal death, we causally identify the impact of intra-household risk-sharing on households’ asset choices. Our study implies an unintended consequence of positive assortative mating, a growing tendency of couples choosing partners with similar socioeconomic statuses, which limits risk-sharing between spouses, thereby discouraging financial risk-taking.