Using the 2021 National Financial Capability Study (NFCS), this study examines the association of employer-sponsored, retirement-plan participation with financial literacy. It also decomposes the association 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 -0.0195, and the unexplained portion of the gap due to return to financial literacy is -0.0321. The negative explained gap due to financial literacy means women have a lower average value of financial literacy than men. A negative unexplained gap due to financial literacy means women have a lower return to financial literacy than men.
