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on Financial Literacy and Education |
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Issue of 2024‒06‒10
three papers chosen by |
| By: | Marta Cota; Ante Sterc |
| Abstract: | Are households with low financial skills disadvantaged in the mortgage market? Using stochastic record linking, we construct a unique U.S. dataset encompassing a rich set of mortgage details and borrowers’ characteristics, including their objective financial literacy measure. We find that households with low financial literacy are up to 4% more likely to search less and lock in at 15-20 b.p. higher rates. Upon origination, unskilled borrowers face a 35-45% higher mortgage delinquency and end up with a 30% lower likelihood of refinancing. Overall, for a $100, 000 loan, the potential losses from low financial literacy are more than $9, 329 over the mortgage duration. To understand how financial education, more accessible mortgages, or mortgage rate changes affect households with low financial literacy, we formulate and calibrate a mortgage search model with heterogeneous search frictions and endogenous financial skills. Our model estimates show that search intensity and financial skill variations contribute to 55% and 10% of mortgage rate variations, respectively. We find that i) more accessible mortgages lead to a higher delinquency risk among low-skilled households, ii) financial education mitigates the adverse effects of increased accessibility, and iii) low mortgage rates favor high-skilled homeowners and, by reinforcing refinancing activity, deepen consumption differences across different financial skill levels. |
| Keywords: | mortgage refinancing, mortgage search, financial skills, financial education, consumption inequality |
| JEL: | E21 G51 G53 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp780&r= |
| By: | Ozili, Peterson K |
| Abstract: | Many developing countries are facing high inflation and the central bank in these countries have adopted several solutions to tame rising inflation. Nigeria transitioned to an inflation targeting monetary policy framework in late 2023 from a monetary targeting monetary policy framework. This study identifies the important success factors for an effective inflation targeting monetary policy regime in Nigeria. The identified success factors include the size or number of economic agents monitoring the inflation target, the credibility of the central bank, the degree of central bank independence, reduction in budget deficit, limited dollarization of the Nigerian economy, effective central bank communication, avoidance of fiscal dominance, financial development, greater financial inclusion, financial stability, and insecurity caused by farmer-herder clashes and terrorism. |
| Keywords: | inflation targeting, inflation, Nigeria, monetary policy, interest rate |
| JEL: | E40 E42 E44 E47 E49 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120775&r= |
| By: | BERTONI Eleonora (European Commission - JRC); COSGROVE Judith (European Commission - JRC); POULIAKAS Konstantinos; SANTANGELO Giulia |
| Abstract: | Context: - Digital skills mismatches have been high on the EU policy agenda for some time. - Skills mismatches are a concern for policymakers and researchers as they are closely associated with negative labour market outcomes such as wage penalties, absenteeism, high turnover, and lower levels of job satisfaction. - Training is one policy instrument that can be implemented to address skills mismatches. Objectives: - This brief contributes to policy on provision of digital skills. It uses data from Cedefop’s second European skills and jobs survey (ESJS2) and provides new evidence by (i) describing the characteristics of the digitally-underskilled in the EU workforce; and (ii) identifying characteristics of EU workers undertaking digital skills education and training. Key policy messages: - Around 13% of EU workers are affected by digital skills mismatch to a great extent. - While new technologies do not necessarily cause mass unemployment, there is a need for upskilling and reskilling of workers who are likely to face marked changes in their job tasks due to the advent of new digital technologies. - Policy efforts could be targeted to those reporting a digital skills mismatch but not participating in any digital skills training, and workers with a higher chance of reallocation due to new digital technologies. - Job-skills requirements, i.e. the level of skills demanded in individuals’ jobs, are the strongest drivers of participation in digital skills training. - Individual attitudes and perceptions (e.g. fear of automation) towards technology are also important drivers of digital skills training participation. - Design and implementation of education and training initiatives should take both individual attitudes and specific job-skills requirements into account. Research implications: - More research on motivation and incentives for training, quality of training and its impact is needed. - More comprehensive measures of digital skills mismatch may enable better targeting and implementation of education and training. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc137073&r= |