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Life Cycle Portfolio Choice in Taxable and Tax-deferred Accounts
| Content Provider | Semantic Scholar |
|---|---|
| Author | Zhou, Jie |
| Copyright Year | 2005 |
| Abstract | In this paper we study the optimal life cycle portfolio choice for households with both taxable accounts (TA) and tax-deferred accounts (TDA). According to the 2001 Survey of Consumer Finances (SCF), 46% of households have positive balances in both accounts and their investment in stock represents 87% of total stock holding of the entire SCF population. There are completely dierent patterns over life cycle in terms of stock market participation rate and stock share in TA and TDA. As a fraction of these households, the stockholders in TDA decrease considerably from 90% when households are young to less than 50% when they are old, while the stockholders in TA increase from 34% to 70%. For stock market participants, the mean (median) stock share in TDA is very high and varies little over life cycle, while the mean (median) stock share in TA is decreasing with age. We calibrate a life cycle model which generates patterns of stock share in TA and TDA for participants similar in the data. The model explicitly incorporates labor income risk, progressive tax, accessibility restrictions on TDA and other features. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://economics.uwo.ca/grad/alumniconference2005/Papers/zhou.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
