Working Paper: NBER ID: w20736
Authors: Michael Callen; Suresh De Mel; Craig McIntosh; Christopher Woodruff
Abstract: The world’s poor are seeing a rapid expansion in access to formal savings accounts. What is the source of savings when households are connected to a formal account? We combine a high-frequency panel survey spanning two and a half years with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. We find that the headwaters of formal savings lie in sacrificed leisure time: households work more, and improved savings options generate an increase in labor effort in both self-employment and in the wage market. The results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
Keywords: formal savings; Sri Lanka; labor effort; income generation
JEL Codes: D14; G21; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of formal savings accounts (G21) | increase in total household income (D19) |
| introduction of formal savings accounts (G21) | increase in earned income (J31) |
| increase in earned income (J31) | increase in labor hours (J22) |
| introduction of formal savings accounts (G21) | increase in labor hours (J22) |
| increase in labor hours (J22) | increase in total household income (D19) |
| introduction of formal savings accounts (G21) | shift from self-employment to wage work (J62) |