This thesis examines the aggregate and redistributive effects of mitigating financial and knowledge barriers that economic agents face. The studies further inform the vital policy discussions on achieving financial education parity and bridging the wealth gap. In the first chapter, I develop a general equilibrium framework, which incorporates household portfolio choices and financial literacy accumulation into a heterogeneous-agent incomplete market model. In the model, households allocate their wealth into safe and risky assets ("bonds" and "stocks"), and accumulate financial literacy to raise their risk-adjusted stock returns. Disciplined to match financial literacy and the stock market participation rate of U.S. households, the model features the competing implications of raising financial literacy: on the one hand, making financial literacy more affordable increases short-run stock demand; on the other hand, larger aggregate capital leads to a smaller marginal product of capital, thereby lowering the stock market participation premium for average investors. These equilibrium channels reduce the equity premium, which has an overall effect on wealth inequality. In the second chapter, I use the proposed model to evaluate the policy effects of subsidizing 75 percent of the household’s financial literacy investment cost. The calibrated model predicts that the subsidy, when financed by a capital income tax, is likely to boost average financial literacy by 10.1 percent while increasing the aggregate participation rate only by 0.2 percentage points. This small policy effect arises from downward pressures on the average equity premium due to an increase in aggregate capital followed by the decline in capital input price, and also due to an increase in the capital income tax rate. Calculating the policy effects without accounting for either channel leads to a predicted 1.9 percentage point increase in the participation rate, whereas accounting only for the price adjustment channel generates a 0.8 parentage points increase. Nevertheless, the policy interventions mitigate wealth inequality by generating heterogeneous portfolio rebalancing across households. With the subsidy, the middle wealth quartiles acquire more financial literacy and shift their portfolios toward stocks. The top quartile attains its maximum literacy level prior to the subsidy and shifts toward bonds to compensate for lower stock returns. Consequently, wealth inequality, measured as a ratio of total wealth held by the top quartile versus the rest of the population, decreases by 1.9 percent.