Workplace Signaling and Financial Commitment: Evidence From a Field Experiment

Abstract

We provide evidence of strategic behavior in financial decisions that occur in the workplace and are observable to one's employer. We offer factory workers the opportunity to sign up for a commitment savings account that credibly signals the intention to remain employed with the firm. Workers are more likely to sign up when the account is endorsed by their employer and their decision is observed by the firm. An experiment with the firm's managers shows that the firm is more likely to invest in the human capital of workers with accounts, suggesting that financial commitment is rewarded by the employer.