The Education Premium: Effects of Educational Attainment on the Financialization of U.S. Households

Abstract

Wealth inequality has increased over the past several decades, prompting an examination of the socioeconomic and demographic factors responsible for this polarization. Both income and education are determinants of wealth, though underlying mechanisms have received less attention in the literature. Referencing the growth of financial markets and personal investments during this period, defined as “financialization,” I consider household financialization—“investedness”—as an increasingly relevant predictor of wealth accumulation. Variables related to the total value of financial assets and participation in financial markets were used in the analysis as proxies for investedness. The study aims to illustrate the specific impact of education on investedness, highlighting differential effects along the income distribution. Results suggest a heightened importance of education, specifically a college degree, at the bottom of the distribution. I propose several opportunities for future research, notably the need to explore the potential benefits of increasing access to financial information and services.