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Inequality and the finance you know: does economic literacy matter?

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  • Anna Lo Prete

    (University of Turin)

Abstract

This paper considers the relationship between financial markets and income distribution from a perspective that emphasizes the role of people’s ability to use financial markets and their instruments in helping reduce income inequality. Using cross-section and panel regression techniques, it documents in a sample of advanced and developing countries that income inequality grows less where economic literacy is higher, while the direct association between financial development and inequality usually referred to as the “finance-inequality nexus” is not significant in the medium term nor in long cross-sectional regressions controlling for the level of economic literacy.

Suggested Citation

  • Anna Lo Prete, 2013. "Inequality and the finance you know: does economic literacy matter?," CeRP Working Papers 136, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:136
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    Cited by:

    1. Valentine Soumtang Bime & Itchoko Motande Mondjeli Mwa Ndjokou, 2023. "Does institutional quality matter in financial development and income inequality nexus? new evidence from Sub-Saharan Africa," Economics Bulletin, AccessEcon, vol. 43(3), pages 1395-1410.
    2. Giovanni Gallo & Alessia sconti, 2023. "Could financial education be a universal social policy? A simulation of potential influences on inequality levels," Center for the Analysis of Public Policies (CAPP) 0182, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    3. Jelson Serafim, 2021. "Financial deepening, Stock market, Inequality and Poverty: Some African Evidence," Working Papers REM 2021/0177, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    4. Mushtaq, Rizwan & Bruneau, Catherine, 2019. "Microfinance, financial inclusion and ICT: Implications for poverty and inequality," Technology in Society, Elsevier, vol. 59(C).
    5. Lo Prete, Anna, 2024. "Digital and financial literacy and the development of e-government platforms," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202411, University of Turin.
    6. Lo Prete, Anna, 2021. "Financial literacy, education, and voter turnout," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202105, University of Turin.
    7. Kaidi Nasreddine & Sami Mensi, 2016. "Financial Development and Income Inequality: The Linear versus the Nonlinear Hypothesis," Economics Bulletin, AccessEcon, vol. 36(2), pages 609-626.
    8. Lo Prete, Anna, 2024. "Political participation and financial education: understanding personal and collective tradeoffs for a better citizenship," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202418, University of Turin.
    9. Yongfen Shi & Sudeshna Paul & Sudharshan Reddy Paramati, 2022. "The impact of financial deepening on income inequality: Empirical evidence from Australia," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3564-3579, July.
    10. Elvira NICA & Adina Teodora PASA & Maria KOVACOVA, 2019. "Economic Education In Human Resources Development," Proceedings of Administration and Public Management International Conference, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 15(1), pages 12-16, October.
    11. Bertola, Giuseppe & Lo Prete, Anna, 2024. "Financial Literacy and Resilience when Survey Respondents Prefer Guessing to Admitting Ignorance," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202406, University of Turin.
    12. Francisco J. Oliver-Márquez & Almudena Guarnido-Rueda & Ignacio Amate-Fortes & Diego Martínez-Navarro, 2022. "Is Income Inequality Influenced by Financial Knowledge? A Macroeconomic and Longitudinal Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3050-3075, December.
    13. de Moraes, Claudio Oliveira & Roquete, Raphael Moses & Gawryszewski, Gustavo, 2023. "Who needs cash? Digital finance and income inequality," The Quarterly Review of Economics and Finance, Elsevier, vol. 91(C), pages 84-93.
    14. Paşa Adina Teodora, 2020. "Economic education in the digital era," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 434-444, July.
    15. Gallo, Giovanni & Sconti, Alessia, 2023. "How much financial literacy matters? A simulation of potential influences on inequality levels," GLO Discussion Paper Series 1266, Global Labor Organization (GLO).
    16. Susanna Levantesi & Giulia Zacchia, 2021. "Machine Learning and Financial Literacy: An Exploration of Factors Influencing Financial Knowledge in Italy," JRFM, MDPI, vol. 14(3), pages 1-21, March.
    17. Bellocchi, Alessandro & Travaglini, Giuseppe, 2024. "Financial literacy, uncertainty and costs of education," Economics Letters, Elsevier, vol. 238(C).
    18. Gislain Stéphane Gandjon Fankem & Marthe Dorelle Melingui, 2021. "Le développement financier affecte‐t‐il l'inégalité de revenus en Afrique subsaharienne?," African Development Review, African Development Bank, vol. 33(4), pages 620-633, December.

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    More about this item

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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