DP12100 Financial Literacy Externalities

Author(s): Michael Haliassos, Thomas Jansson, Yigitcan Karabulut
Publication Date: June 2017
Keyword(s): financial literacy, household finance, Refugees, Social interactions
JEL(s): D14, E21, F22, G11, I28
Programme Areas: Financial Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12100

This paper uses unique administrative data and a quasi-field experiment of exogenous refugee allocation in Sweden to estimate effects of exposure to financially literate neighbors. It contributes evidence of causal impact of financial literacy and points to a social multiplier of financial education. Exposure promotes saving for retirement in the medium run and stockholding in the longer run, especially when neighbors have economics or business education, but only for educated or male-headed households. Findings point to knowledge transfer rather than mere imitation. We do not find significant effects on income or employment prospects, except for employment in the financial sector.