Financial Literacy and Self-employment

Aida Ćumurović and Walter Hyll

No 11/2016, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: In this paper, we study the relationship between financial literacy and self-employment. We use established financial knowledge-based questions to measure financial literacy levels. The analysis shows a highly significant correlation between self-employment and financial literacy scores. To investigate the impact of financial literacy on being self-employed, we apply instrumental variable techniques based on information on economic education before entering the labour market and education of parents. Our results reveal that financial literacy positively affects the probability of being self-employed. As financial literacy is acquirable, findings suggest that entrepreneurial activities may be raised via enhancing financial knowledge.

Keywords: financial literacy; financial sophistication; self-employment (search for similar items in EconPapers)
JEL-codes: A20 D03 J23 J24 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ent
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:iwh-11-16

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