Impact of demographic change on stock prices

•We investigate the possible impact of demographic change on stock prices.•Stock prices are positively affected by the prime earning age population proportion.•Stock prices are negatively affected by the proportion of retirees.•Results indicate a structural break in the early 1990s.•We show that budget deficit and inflation have a negative effect on stock prices.

Focusing on the relationship between the demographic structure of population and stock prices, we find that stock prices are positively affected by the proportion of population in their prime earning age and negatively affected by the proportion of retirees. The empirical analysis identifies a structural break coinciding with the first wave of baby boomers reaching their prime earning age in the early 1990s. In addition, the results show that both budget deficit and inflation have a negative effect on stock prices.