Investigating spillovers of education policy: The impact on household saving behavior

Abstract

Exploiting a legislative change that increased mandatory schooling from five to eight years in Türkiye, we investigate the impact of the reform on household saving decisions. We find that while the reform increased the education level of both men and women, its impact on household saving behavior was limited: we estimate a positive impact of this reform only on gold and retirement savings. We investigate several potential explanations and argue that low financial literacy is the main reason behind the ineffectiveness of the reform in this context. Our results suggest a limitation of the scope of policies that only increase the years of schooling for financial market participation and highlight the importance of the inclusion of financial training in education curricula.