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Financial Literacy and Self‐Employment

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  • Aida Ćumurović
  • Walter Hyll

Abstract

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.

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  • Aida Ćumurović & Walter Hyll, 2019. "Financial Literacy and Self‐Employment," Journal of Consumer Affairs, Wiley Blackwell, vol. 53(2), pages 455-487, June.
    • Handle: RePEc:bla:jconsa:v:53:y:2019:i:2:p:455-487
    DOI: 10.1111/joca.12198
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    9. Sara Lamboglia & Noemi Oggero & Mariacristina Rossi & Massimiliano Stacchini, 2024. "Financial knowledge and career aspirations among the young: a route to entrepreneurship," Questioni di Economia e Finanza (Occasional Papers) 838, Bank of Italy, Economic Research and International Relations Area.
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    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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