Effects of adult children's marriage on household stock market participation: An event-study difference-in-differences approach using Chinese micro data

Abstract

This paper examines households' stock market participation responses to a critical life-cycle event, adult children's marriage. An event-study difference-in-differences approach is employed to facilitate identification, which compares changes in the stock market participation behaviors of households that experience children's marriage with households that experience it later as well as households that never experience it. Exploiting household-wide variations in exposure to children's marriage using the China Family Panel Studies data over the 2010–2020 period, this paper finds that 2 years after children's marriage, households significantly enhance their likelihood of participating in the stock market. Households' willingness to participate increases by 1.1 to 1.6 percentage points depending on specifications. This paper's finding supports time-varying risk aversion at the household level. Mechanism analysis indicates that children's marriage raises household risk preferences because it mitigates parental old-age support concerns and alleviates households' consumption commitment to housing and children.