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Employee Financial Literacy and Retirement Plan Behavior: A Case Study

Robert Clark, Annamaria Lusardi () and Olivia Mitchell

No 21461, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system’s defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.

JEL-codes: D91 J26 J32 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-lab
Date: 2015-08
Note: AG
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Published as Robert Clark & Annamaria Lusardi & Olivia S. Mitchell, 2017. "Employee Financial Literacy And Retirement Plan Behavior: A Case Study," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 248-259, January.

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Journal Article: EMPLOYEE FINANCIAL LITERACY AND RETIREMENT PLAN BEHAVIOR: A CASE STUDY (2017) Downloads
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