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Endogenous Financial Literacy, Saving, and Stock Market Participation

Luca Spataro () and Lorenzo Corsini ()

FinanzArchiv: Public Finance Analysis, 2017, vol. 73, issue 2, 135-162

Abstract: Recent empirical literature provides evidence that financial literacy, human capital, education, saving, and stock market participation are interconnected decisions. However, a consolidated theoretical explanation of such connections is missing. We contribute to this topic by building a framework that includes all these decisions in an encompassing model. We build a two-period model in which individuals acquire education, work, and save for retirement; financial literacy reduces the costs of managing risky assets available on the stock market. Our results, besides providing a theoretical foundation for the role and the determinants of the above-mentioned decisions, can also explain several stylized facts on literacy, human capital, and stock market participation.

Keywords: financial literacy; portfolio decisions; human capital; saving for retirement; stock market participation (search for similar items in EconPapers)
JEL-codes: D14 D91 G11 J24 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1628/001522108X14877521353555

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