Economic literacy, inequality, and financial development

Anna Lo Prete

Economics Letters, 2013, vol. 118, issue 1, 74-76

Abstract: Empirical studies of the link between finance and inequality document that across countries financial development is associated with lower and decreasing income inequality. This article uses an indicator of economic literacy as a proxy for the ability to reap the benefits of financial investment opportunities, and documents that such specific competences matter for the relationship between changes in inequality and financial development. As financial markets become more sophisticated, the ability to take advantage of new investment opportunities may help reduce inequality, and the empirical association between financial development and lower income inequality indeed appears to be driven by economic literacy.

Keywords: Inequality; Financial market participation; Economic competences (search for similar items in EconPapers)
JEL-codes: G1 I24 O16 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:1:p:74-76

DOI: 10.1016/j.econlet.2012.09.029

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