The effects of financial education in the workplace: Evidence from a survey of employers

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2009-10-01

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Abstract

We examine the effects of education on financial decision-making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on behavior. The current article undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for nonhighly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity. © 2008 Western Economic Association International.

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Published Version (Please cite this version)

10.1111/j.1465-7295.2008.00156.x

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Bayer, PJ, BD Bernheim and JK Scholz (2009). The effects of financial education in the workplace: Evidence from a survey of employers. Economic Inquiry, 47(4). pp. 605–624. 10.1111/j.1465-7295.2008.00156.x Retrieved from https://hdl.handle.net/10161/2031.

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Bayer

Patrick Bayer

Gilhuly Family Distinguished Professor in Economics

Bayer's research focuses on wide range of subjects including racial inequality and segregation, social interactions, housing markets, education, and criminal justice. His most recent work has been published in the Quarterly Journal of Economics, American Economic Review, Econometrica, and the Review of Financial Studies. He is currently working on projects that examine jury representation and its consequences, the intergenerational consequences of residential and school segregation, neighborhood tipping, gentrification, the effect of police and criminal justice interactions on families, and the impact of bail reform.


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