Pay Me Later: Savings Constraints and the Demand for Deferred Payments

Lasse Brune, Eric Chyn and Jason Kerwin

American Economic Review, 2021, vol. 111, issue 7, 2179-2212

Abstract: We study a simple savings scheme that allows workers to defer receipt of part of their wages for three months at zero interest. The scheme significantly increases savings during the deferral period, leading to higher postdisbursement spending on lumpy goods. Two years later, after two additional rounds of the savings scheme, we find that treated workers have made permanent improvements to their homes. The popularity of the scheme implies a lack of good alternative savings options. The results of a follow-up experiment suggest that demand for the scheme is partly due to its ability to address self-control issues.

JEL-codes: D91 G51 J31 O12 O13 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (12)

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Working Paper: Pay Me Later: Savings Constraints and the Demand for Deferred Payments (2021)
Working Paper: Pay Me Later: Savings Constraints and the Demand for Deferred Payments (2021)
Working Paper: Pay Me Later: Savings Constraints and the Demand for Deferred Payments (2021)
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DOI: 10.1257/aer.20191657

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