Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299904 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 16976
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using university admission cutoffs that generate exogenous variation in college-major choices, we provide causal evidence that enrollment in a business or economics program leads individuals to invest significantly more in the stock market, earn higher portfolio returns, and ultimately accumulate higher levels of wealth later in life. Underlying these effects, beyond differences in risk-taking, innate ability, labor market outcomes, or scale effects, is the enhanced ability of business educated individuals to acquire and process economic information and make informed investment decisions. Early investments in financial literacy thus play an important role in generating higher returns that significantly alter individuals' life-cycle wealth profiles.
Subjects: 
portfolio choice
financial literacy
portfolio returns
household wealth
returns to education
distribution of wealth
JEL: 
G11
G51
G53
I26
Document Type: 
Working Paper

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