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The racial/ethnic gap in financial literacy in the population and by income
Author(s) -
Angrisani Marco,
Barrera Sergio,
Blanco Luisa R.,
Contreras Salvador
Publication year - 2021
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12507
Subject(s) - socioeconomic status , ethnic group , disadvantage , demographic economics , financial literacy , literacy , population , economics , demography , economic growth , sociology , political science , finance , anthropology , law
We investigate the determinants of the racial/ethnic gap in financial literacy in the general population and within income classes, with a focus on childhood family circumstances and neighborhood socioeconomic characteristics. Our model explains 48% and 57% of the observed gap for Blacks and Hispanics, respectively. For both groups, differences in individual characteristics and neighborhood socioeconomic status contribute the most to the explained gap. The White–Minority gap narrows when moving from low‐ to high‐income classes, but the ability of the model to explain it decreases monotonically. Identifying which additional barriers put minorities at a disadvantage is key to improve financial literacy.