Investment in children’s higher education and household asset allocation in China

Autor: Yuanyuan Gu, Mary Arends-Kuenning
Jazyk: angličtina
Rok vydání: 2022
Předmět:
Zdroj: Journal of Applied Economics, Vol 25, Iss 1, Pp 1081-1126 (2022)
Druh dokumentu: article
ISSN: 15140326
1667-6726
1514-0326
DOI: 10.1080/15140326.2022.2107371
Popis: This paper explores how the anticipated expenditure on children’s college education affects household asset allocation, applying a two-stage budgeting model of asset demand by using the 2016 China Family Panel Studies Data (CFPS). The empirical results show that if a household plans to send a child to college, the probability of holding risky assets increases by 1.7 percentage points, and the probability of holding investable housing assets increases by 3.8 percentage points. Furthermore, we also find that as the expected year of college entry approaches, households prefer less liquid assets. When the expected year is still far in the future, they prefer liquid assets with high-risk and illiquid assets with high-return. These findings imply that policymakers should make reforms in the financial market and real estate market, as well as provide more kinds of investment products, thereby promoting household investment diversification.
Databáze: Directory of Open Access Journals
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