Examining the Gender Gap in Participation in Employer-Sponsored Retirement Plans: Oaxaca Decomposition

Using the 2021 National Financial Capability Study (NFCS), this study examines the association between gender-based participation in employer-sponsored retirement plans and financial literacy. It also decomposes the association between gender-based participation in employer-sponsored retirement plans into its explained and unexplained portions using the Oaxaca decomposition. The explained portion measures how much of the gender gap in employer-sponsored, retirement-plan participation is due to the differences in the level of financial literacy. The unexplained portion measures how much of the gender gap in employer-sponsored, retirement-plan participation is due to the difference in the return to financial literacy between men and women. The results show that the explained portion of the gap due to financial literacy is -0.02, and the unexplained portion of the gap due to return to financial literacy is -0.03. The negative explained and unexplained gap due to financial literacy suggests that women have a lower average value of financial literacy and a lower return to financial literacy than men.