| In recent years,there are abnormal fluctuations of both stock market prices and real estate prices in China.This may be related to the irrational investment behaviours of retail investors.With the accumulation of household wealth in China,more and more families begin to face the decision-making problems of how to carry out wealth management to maintain and increase the value of assets.In addition,although China's professional investment institutions are improving gradually,individual investors still play a crucial role in the financial market.Many theoretical studies have proved that holding various types of assets can spread risks and increase households' welfare.Generally,it can also broaden the depth and breadth of capital markets and promote the development of local finance.However,in reality,the problem of “limited participation” in financial markets is still widespread.Because traditional economic theory cannot explain this phenomenon completely,new theories and researches on this topic have emerged.This research focuses on the issues of family investment behaviours from the perspective of human capital.Human capital is the core factor for a country to enhance its innovation ability,so it is highly valued by the political and academic fields.With the popularization of nine-year compulsory education,the overall educational level of our residents has increased substantially over the past three decades.However,compared with developed countries,there is still plenty of room to improve.Is this one of the vital reasons for the ‘limited participation' of households in China? Human capital,as one of the three major factors explaining the gap of cross-border income used in the Development Accounting Theory,not only directly increases the wage income of residents,but also indirectly increases the property income of residents by affecting households' investment habits.Researching the influences of human capital on household asset allocation can help to explain the paradox of limited participation.It can also help to include property income in a comprehensive assessment of education return.In this research,we have used a variety of questionnaire survey data.By using Regression Discontinuity Design,Instrument Variable and Difference-in-Difference methods,we identify the causal influence of human capital on household investment behaviours.Besides,we analyze the influential mechanisms empirically.The practical significance of this research includes:(a)It can help our governments and residents give priority to improving human capital;(b)It guides the investors to make rational investment decisions;(c)It will help financial institutions design personalized products after understanding the preferences of different types of households;(d)The last chapter focusing on middle-aged households can help to understand the impact of population ageing on capital markets and help government respond actively to the problem of ageing.We use six chapters to carry on the writing.Chapter 1 is introduction.Chapter 2 summarizes the existing literature from both theoretical and empirical aspects,and further gives out the writing thoughts and structure of the whole text.We can get three main points from this part: First,the human capital level in the early stage of life cycle attracts academic attention,because it has a great impact on individual performance in later life.Second,Different aspects of generalized human capital definition have different effects on households investment behaviours,thus they should be analyzed separately.Third,the research on the causal relationship between human capital and family asset allocation is still scarce.Therefore,the rest of the dissertation is organized as follows.Chapter 3 begins with the formation process of adolescents' human capital.We analyze the influence of maternal education on child's human capital development.By exploiting the temporal and geographical variations in the enforcement of compulsory schooling laws in China,we investigate the causal impact of mother's schooling on various outcomes of adolescent development.Using data from the China Family Panel Studies(CFPS 2010-2016),we find that mother's education increases adolescents' school enrollment,math test scores,college aspiration,and internal locus of control related to education.Mother's education also improves adolescent mental health status and reduces the incidence of underweight.We also find considerable gender heterogeneity in the effects of mother's education.For girls,the IV estimates suggest that maternal schooling has significantly increased school enrollment rate,math test scores,and internal locus of control.By contrast,boys gain little or less from mother's increased education,in terms of those outcomes.For boys,mental health status and incidence of underweight are affected by the level of mother's education.In order to prove the reliability of these results,we have done a series of related tests,including parallel trend test,placebo test,permutation test and robustness test.Furthermore,we investigate whether our estimates for mother's increased education due to the reform exposure would be confounded by other policies or factors,such as migration,the one-child policy and new cooperative medical scheme.The results further indicate that mother's education leads to an increase in family resources for children and an improvement in maternal mental health and parenting,which we interpret as potential mechanisms behind our findings.Specifically,the possible explanation for the gender differences in the effects of mother's education is that girls generally had lower school enrollment than boys in rural China,because of the traditional pro-son bias and perceived lower returns and greater opportunity costs of girls' education.Mothers with more education provide a role model for daughters and have more bargaining power regarding girls' educational spending,thereby improving girls' education-related outcomes.For boys,improvement of mental health status and weight gain can be explained by the mother's increased education improving her own mental health.Our findings about the nurturing effect of mother's education in the human capital formation of their children have important policy implications.Financial investment in women's education may have external economic and social returns.Public programs that aim to increase women's education may benefit future generations and reduce intergenerational inequality.Chapter 4 selects the schooling years as a representative variable of human capital.Using data from 2010 to 2016 waves of China Family Panel Studies(CFPS),we investigate the causal effect of education on household portfolio choice by exploiting Fuzzy Regression Discontinuity Design(FRDD)to correct the endogenous problem of education.In this study,we explore an exogenous education reform in 1986,which creates the education variations temporally and geographically.The results indicate that the education of household head has a significantly positive influence on household formal financial assets market participation.This is not the case for participating in private lending and real estate markets.The effects of education on household portfolio choice is greater in males than in females.Furthermore,we prove that increasing the income level and decreasing the cost of gathering and processing information are main channels through which the education affect the portfolio choice.Our findings indicate that the increase of schooling years can promote residents' participation in formal financial asset market and adoption of more reasonable investing ways.In order to improve residents' financial market participation rate,enhance investors' welfare and promote the stable development of financial markets,the government should pay attention to national human capital investment and carry on some projects to raise residents' awareness on financial knowledge.Chapter 5 selects cognitive ability as the representative variable of new human capital.We investigate the effect of cognitive abilities on household portfolio choice in middle-old aged households,using IV-Probit and IV-Tobit methods to correct for the endogenous nature of cognitive abilities.The results indicate that the cognitive abilities of household head have a significantly positive influence on the amount of household financial assets and risky financial market participation.However,the positive influence on risky financial asset participation and allocation is mainly concentrated in households with higher income,higher education and better health.We show that decreasing the cost of processing information is the main channel.But to some extent,the perception of risk may be another potential channel.As the problem of ageing is becoming more and more serious,the proportion of the elderly population is increasing year by year.The middle-aged families need to accumulate(or have already accumulated)enough wealth for their life after retirement,and at the same time,their cognitive ability is gradually decreasing.Therefore,this study about how middle-aged households allocate wealth between risk and risk-free assets can help to analyze the impact of ageing trends on capital markets and guide the government on how to allocate social resources more effectively.Chapter 6 summarizes the full text and draws the main conclusions.The potential innovations of this research are as follows:First,this paper uses modern econometric analysis methods to study human capital and Chinese household investment behaviours systematically.As a typical emerging country,China has a complex social background and traditional financial environment.Chinese households' investment behaviours often show many characteristics different from those of developed countries.Therefore,we cannot simply transfer the research conclusions and experiences from developed countries.This research provides reliable empirical evidence for a comprehensive understanding of the characteristics of households' investment behaviours in China.In addition,the measurement of human capital covers various aspects such as cognitive ability and education level.The test of causal effects and analysis of influential mechanisms are also lacking in the previous literature.Second,in Chapter 3,we choose a typical developing country which provides less social protection for children,in terms of nutrition,health,education,and other child-related services,as our research object.We examine the effects of mother's schooling on various outcomes of adolescent children(i.e.,ages 10–19),including school enrollment,educational aspiration,cognition,internal locus of control,self-reported general health,mental health,and anthropometric outcomes.Moreover,few papers have examined the mental health of children.The mental health of adolescents in developing countries has not been thoroughly studied even though mental health problems are a leading health problem for adolescents and have longlasting effects throughout life.Our findings regarding various adolescent outcomes may provide additional evidence on the causal relationship between mother's education and children's success in the longer term,and contribute to our understanding of the process of human capital formation.Furthermore,we find considerable gender heterogeneity in the effects of mother's education and explore different mechanisms by which mother education affects sons and daughters' outcomes.Third,Chapter 4 is the first study in China to identify the causal effect of household head's education on household financial choice.Most of the previous studies treated education as an exogenous variable and control it in the regression equation directly.However,in addition to the measurement error of schooling years,unobservable factors such as individual ability or family background may be related to the individual's educational and investment behaviours simultaneously,so there must be endogeneity problem.This chapter uses the 1986 compulsory education law as an exogenous policy shock to create discrete changes in individual years of schooling.Further,using the fuzzy regression discontinuity design,we give out reliable estimations of causality between education and household investment behaviours.In addition,we verify that income and information cost are the main channels by which education affects household investment behaviours from empirical perspectives.We also find that there is a gender difference in the impact of education on household investment behaviours.Fourth,Chapter 5 starts with the information barrier of household risky financial market participation.By summarizing the existing results,we suggest that the obstacles in the effective transmission of information may not only lay in the source of information.It may be due to the individual ability to receive and to process information.The existing empirical researches on cognitive ability and family asset allocation do not consider the endogenous problem of individual cognitive ability.We attempt to supplement the shortness of the existing literature and to raise more thought.With the availability of data of middle-aged households,We study the influence of elders' cognition decline process on the total amount of financial assets,risky financial market participation rate and allocation ratio on risky assets,using the instrumental variable method to deal with the endogeneity of cognitive ability.For influential mechanisms,different from studies on correlation relationship,we prove that reducing information cost is the main channel for cognitive ability to affect household asset allocation,but it is still possible that changing risk perception is another channel. |
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