How Stock Market Investments Affect Labor Supply, According to New Research
Investing in the stock market is a widely favored method for boosting passive income, with potential implications for global assets and the real economy. Additionally, the effect of stock market earnings on general taxation and household decision-making cannot be ignored.
A recent joint study conducted by esteemed scholars Dr. Xin Zou from Hong Kong Baptist University School of Business Administration, Li Teng from Sun Yat-sen University, Qian Wenlan from Hong Kong University School of Economics and Management, and Wei A. Xiong from Shenzhen Stock Exchange has shed light on how the amount of assets garnered from the stock market influences individual labor supply. The research reveals that a 10% increase in monthly stock market returns leads to a 3.8% reduction in labor supply.
Notably, previous studies have highlighted behavioral factors such as investor mindsets and reliance on references as influential forces driving stock market behavior. These studies have also explored the impact of stock market fluctuations on household decisions. However, Dr. Zou’s groundbreaking research provides fresh insights, proposing and predicting a causal relationship between stock market investment and labor supply. The research team developed their primary sample by collecting monthly performance records of insurance brokers from a leading insurance company in China, as well as utilizing stock investment data from the Shenzhen Stock Exchange. For a comprehensive analysis, stock characteristics and market return data from the China Economic and Financial Research Database were also incorporated.
The key findings of the study are as follows:
- Returns on stock investments have a significant negative effect on labor supply: The study reveals that a 10% increase in monthly stock market returns led to a 3.8% decrease in sales commission in the subsequent month. Furthermore, this impact on labor supply was more pronounced among workers whose share of stock investment returns exceeded the average returns. To substantiate the causal relationship, the study presented relevant data demonstrating that other factors, such as changes in the economic environment, did not substantially affect the relationship between stock investment returns and sales commissions.
- Stock investment returns directly affect labor supply: The analysis highlighted that only the previous month’s stock investment return had a statistically and economically significant impact on the current month’s sales commission. This direct influence aligns with the referential dependence theory, which suggests that workers experience short-term psychological effects based on stock market returns. When reaching a desired income level, workers reduce their labor supply, opting for more leisure activities.
This research contributes valuable insights into the intricate relationship between stock market investments and labor supply. It emphasizes the potential impact of individual investment decisions on broader economic dynamics, highlighting the need for businesses and policymakers to consider these interconnections when formulating strategies. Understanding the correlation between stock market returns and labor supply offers a promising avenue for optimizing economic efficiency.
<匯港通訊> Investing in the stock market is one of the methods preferred by many investors to increase passive income, and it affects assets around the world, reflecting the spread of stock market volatility to the real economy. Assets obtained from the stock market can also directly affect general taxation or indirectly change the decisions made by households.
According to a study conducted jointly by Dr. Xin Zou from the Hong Kong Baptist University School of Business Administration, Li Teng, a scholar from Sun Yat-sen University, Qian Wenlan, a scholar from the Hong Kong University School of Economics and Management and the National University of Singapore Business School, and Wei A. Xiong from Exchange Shenzhen Stock, Analyzing how the amount of assets obtained from the stock market affects labor supply at the individual level, the research results indicate that a There will be a 10% increase in the monthly return on stock market investment reduces the labor supply by 3.8%.
Zou Xin pointed out that previous studies have found that behavioral factors such as investor mindsets and reliance on references can affect investment behavior in the stock market, and also discussed how stock market fluctuations affect family decisions. Unlike the past, his research has brought new perspectives to scholars, and for the first time proposed and predicted the causal relationship between stock market investment and labor supply. The team established the main sample of the study with two sets of data, namely, obtaining a data set from a leading insurance company in China, collecting the monthly performance records of insurance brokers; and use stock investment information from the Shenzhen Stock Exchange (SZSE). ). In addition, the study also uses stock characteristics and market return data from the China Economic and Financial Research Database for a more complete analysis.
The main findings of the research include the following:
1. Returns on stock investments have a significant negative effect on labor supply.
The study found that after comparing two sets of data on individual job performance and stock investment, the results show that when the monthly return on investment increases by 10%, the sales commission in the following month will decreased by 3.8%. In addition, the effect on labor supply is more pronounced when workers earn a larger share of stock investment returns compared to average returns. In order to positively confirm this causal relationship, the study also provided relevant data to show that the relationship between stock investment returns and sales commissions is generally not affected by other factors, such as common changes in the economic environment or flow unique assets of an individual.
2. Stock investment returns have a direct negative relationship with labor supply
The analysis also found that only the previous month’s stock investment return has a statistically and economically significant impact on the current month’s sales commission, which proves its direct impact and deserves the attention of business leaders. This pattern is closely related to temporality and is consistent with referential dependence theory, which states that workers experience short-term psychological effects based on stock market investment returns, and when they reach a level given income, workers reduce their labor supply and choose to enjoy more. leisure activities. (SY)
#HKBU #Research #increase #monthly #stock #market #investment #returns #reduce #labor #supply
