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

Lasse Brune, Eric Chyn and Jason Kerwin

No 28611, NBER Working Papers from National Bureau of Economic Research, Inc

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 post-disbursement 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: D14 D9 D90 D91 J22 J33 O12 O15 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-hrm and nep-lma
Note: DEV LS
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Citations: View citations in EconPapers (13)

Published as Lasse Brune & Eric Chyn & Jason Kerwin, 2021. "Pay Me Later: Savings Constraints and the Demand for Deferred Payments," American Economic Review, American Economic Association, vol. 111(7), pages 2179-2212, July.

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Journal Article: 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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