The Empirical Research on Job Stability and Household Financial Asset Allocation

Abstract

Based on the evidence from China, this paper explores the influence of job stability on household financial asset allocation. The objective of the research seeks to provide positive assistance in guiding households to allocate their financial assets wisely. It is reviewing the relevant literature on household asset portfolios to explain why job stability may impact family financial portfolio decisions from different perspectives. The regression analysis of the proposition is conducted using the China Household Financial Service (CHFS2019) data. The study finds that job stability contributes significantly to household risky asset holdings through two main pathways: increasing labour income risk and occupational uncertainty. In regions of better economic conditions and higher financial accessibility, residents tend to be more sensitive to career stability, thus changing investment decisions. The research concludes that a full understanding of job stability and a good judgement of family income and family risk tolerance are essential to make informed financial asset allocation decisions.