Faculty of Economics and Business Administration Publications Database

Has Greater Stock Market Participation Increased Wealth Inequality in the US?

Bilias, Yannis
Georgarakos, Dimitris
Volume: 63
Number: 1
Pages: 169 - 188
Month: March
ISSN-Print: 0034-6586
Link External Source: Online Version
Year: 2017

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 U.S. 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.