Selling off stock during the recent recession may have contributed to U.S. wealth inequality. Using PSID data, Frank Stafford and Bing Chen found that Americans with less education and savings were more likely to sell stock during the recent downturn and therefore less likely to benefit from the subsequent rebound. Stafford speculates that many of those who exited may never get back in, turning instead to traditional savings accounts. This is a mistake, he says: “Unless we get a flash of brilliance for a new pension system, stocks are a really important ingredient.”

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