In this paper, the effect of the higher-education ratio on the distribution of ﬁnancial literacy in Taiwan is investigated with the unconditional quantile estimation suggested by Firpo et al. (2009). Our empirical data are obtained from three surveys conducted in 2007, 2009, and 2011 by the Financial Supervisory Commision, R.O.C. Using the method of factor analysis suggested by van Rooij et al. (2011), the ﬁnancial literacy is measured from 18 questionnaires regarding the knowledge of management of cash, savings, credit, and loans. In total, 3,155 individuals were surveyed, namely, 1,005 in 2007, 919 in 2009, and 1,231 in 2011. Our empirical results conclude that an increase in higher education not only increases the acquisition of ﬁnancial literacy (which is more signiﬁcant at quantiles smaller than 0.52), but also reduces the dispersion of the ﬁnancial literacy distribution. This conclusion provides evidence in support of the policy of higher education expansion. Given the positive eﬀect of ﬁnancial literacy on capital income and retirement plans, the level of financial literacy will be increased and its dispersion will be decreased with the expansion of higher education, so that income inequality as a result will be reduced.
|Journal||Journal of Economics and Management|
|Publication status||Published - 2015|