Participation in the stock market is limited, especially early in life. By contrast, human capital investment is widespread, especially early in life. Returns to equity are constant across households, while returns to human capital vary. The contribution of this paper is to demonstrate that once...

In this paper, we investigate the impact of the option to retire and subsequently reverse that decision on an individual's consumption and portfolio decisions. The two job status states considered are the working state, which generates positive labor income, and the retirement state with zero...

We show that the net corporate payout yield predicts both the stock market index and house prices and that the log home rent-price ratio predicts both house prices and labor income growth. We incorporate the predictability in a rich life-cycle model of household decisions involving consumption...