Fintech to the (Worker) Rescue: Earned Wage Access and Employee Retention

Abstract

Using novel data from a Mexican FinTech firm, we study the usage by workers of earned wages access, an innovative financial service offered by firms to their employees as a benefit. We find usage to be significant and concentrated towards the end of the pay cycle. We document that such usage is associated with a higher employee retention, suggestive of improved welfare. We consider the possible underlying mechanisms for a causal effect, liquidity insurance and catering to present-bias, and find empirical evidence supportive of both being at play for different segment of users.

Keywords: Fintech, Labor Finance

JEL Classification: J41, J63, J2