What Explains the Gender Gap in Financial Literacy? The Role of Household Decision-Making

Raquel Fonseca (), Kathleen Mullen, Gema Zamarro and Julie Zissimopoulos

No WR-762, Working Papers from RAND Corporation

Abstract: Research has shown that financial illiteracy is widespread among women, and that many women are unfamiliar with even the most basic economic concepts needed to make saving and investment decisions. This gender gap in financial literacy may contribute to the differential levels of retirement preparedness between women and men. However, little is known about the determinants of the gender gap in financial literacy. Using data from the RAND American Life Panel, the authors examined potential explanations for the gender gap including the role of marriage and division of financial decision-making among couples. They found that differences in the demographic characteristics of women and men did not explain much of the financial literacy gap, whereas education, income and current and past marital status reduced the observed gap by around 25%. Oaxaca decomposition revealed the great majority of the gender gap in financial literacy is not explained by differences in covariates - characteristics of men and women - but due to coefficients, or how literacy is produced. They did not find strong support for specialization in financial decision-making within couples by gender. Instead, they found that decision-making within couples was sensitive to the relative education level of spouses for both women and men.

JEL-codes: D13 D14 J16 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Journal Article: What Explains the Gender Gap in Financial Literacy? The Role of Household Decision Making (2012)
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