Gender Differences in Savings over the Life-Cycle: The Role of Financial Literacy

Talk by Marta Cota (Nova School of Business and Economics) as part of the Research Seminar Series of the IOS Economics Department.

This paper examines gender differences in wealth accumulation through a microfounded model of financial decision-making, and highlights that gender gaps in financial literacy can contribute to gender wealth inequality over the life-cycle. Using data from US and Dutch surveys, we show that women are more likely to delegate financial decisions and have lower financial literacy, which however increases after events such as divorce or widowhood, or after shocks to their spouse's health. Moreover, while financial literacy increases women’s investment margins more than men's, its impact is stronger for safe assets accumulation and limited for equity holdings, suggesting a role for subjective financial confidence in shaping their investment margins. Our model highlights how marital dynamics influence financial decisions and underscores the importance of targeted policies to improve women’s financial literacy, promote independence, and reduce gender wealth disparities over the life-cycle.