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

32 Pages Posted: 8 Apr 2022

See all articles by Jose Murillo

Jose Murillo

Harvard University

Boris Vallee

Harvard Business School - Finance Unit

Dolly Yu

Yale School of Management

Date Written: March 27, 2022

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

Suggested Citation

Murillo, Jose and Vallee, Boris and Yu, Dolly, Fintech to the (Worker) Rescue: Earned Wage Access and Employee Retention (March 27, 2022). Available at SSRN: https://ssrn.com/abstract=4067701 or http://dx.doi.org/10.2139/ssrn.4067701

Jose Murillo

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Boris Vallee

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States

Dolly Yu (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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