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Title: Life-cycle stock market participation in taxable and tax-deferred accounts
Authors: Zhou, Jie.
Keywords: DRNTU::Social sciences::Economic development
Issue Date: 2012
Source: Zhou, J. (2012). Life-cycle stock market participation in taxable and tax-deferred accounts. Journal of economic dynamics and control, 36(11), 1814-1829.
Series/Report no.: Journal of economic dynamics and control
Abstract: The stock market participation patterns differ significantly in taxable (TAs) and tax-deferred accounts (TDAs). This paper develops a quantitative life-cycle model to study the optimal stock market participation choice for households with assets in both TAs and TDAs. We find that differential costs of stock market participation in the two accounts explain the higher participation rate in TDAs early in life relative to TAs and the increasing stock market participation rate in TAs over the life cycle. We also show that the differential tax treatment between TAs and TDAs is responsible for the decline in the participation rate in TDAs late in life, while the basis-reset provision of the tax code is not quantitatively important.
ISSN: 0165-1889
DOI: 10.1016/j.jedc.2012.05.002
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:HSS Journal Articles

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