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The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers

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  • Patrick J. Bayer
  • B. Douglas Bernheim
  • John Karl Scholz

Abstract

We examine the effects of education on financial decision-making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on rates of behavior. The current paper undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for non-highly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5655.

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Date of creation: Jul 1996
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Publication status: published as Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 2009. "The Effects Of Financial Education In The Workplace: Evidence From A Survey Of Employers," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 605-624, October.
Handle: RePEc:nbr:nberwo:5655

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  1. B. Douglas Bernheim & John Karl Scholz, 1992. "Private Saving and Public Policy," NBER Working Papers 4215, National Bureau of Economic Research, Inc.
  2. B. Douglas Bernheim & Daniel M. Garrett, 1996. "The Determinants and Consequences of Financial Education in the Workplace: Evidence from a Survey of Households," Working Papers, Stanford University, Department of Economics 96007, Stanford University, Department of Economics.
  3. Leslie E. Papke & Mitchell Petersen & James M. Poterba, 1993. "Did 401(k) Plans Replace Other Employer Provided Pensions?," NBER Working Papers 4501, National Bureau of Economic Research, Inc.
  4. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 710, Princeton University, Department of Economics, Industrial Relations Section..
  5. King, Mervyn, 1992. "Growth and distribution," European Economic Review, Elsevier, Elsevier, vol. 36(2-3), pages 585-592, April.
  6. Poterba, J.M. & Venti, S.F. & Wise, D.A., 1992. "401(k) Plans and Tax-Deferred Savings," Working papers 92-14, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. B. Douglas Bernheim, 1996. "Rethinking Saving Incentives," Working Papers, Stanford University, Department of Economics 96009, Stanford University, Department of Economics.
  8. Douglas D. Bernheim, . "Financial Illiteracy, Education, and Retirement Saving," Pension Research Council Working Papers 96-7, Wharton School Pension Research Council, University of Pennsylvania.
  9. Eric M. Engen & William G. Gale & John Karl Scholz, 1994. "Do Saving Incentives Work?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 85-180.
  10. Leslie E. Papke, 1995. "Participation in and Contributions to 401(k) Pension Plans: Evidence from Plan Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 311-325.
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