Childhood Experience of Father's Job Loss and Stock Market Participation

Using data from the Panel Study of Income Dynamics (PSID), I document that childhood experience of father's job loss decreases the propensity to own stocks as an adult. If this experience takes place at the age of 5 10 years, the probability of owning stocks decreases by 2.9 percentage points in a sample with mean stock market participation rate of 17 . This finding is robust to alternative definitions of age ranges and controlling for random unobserved effects. I also find an effect of similar magnitude in the Health and Retirement Study (HRS) data.