76386 Finance & PSD Impact SEPTEMBER 2012 The Lessons from DECFP Impact Evaluations ISSUE 19 Our last impact note discussed a financial literacy intervention focused just on migrants; this note shows some of the gains possible from training both the migrant and their remaining family member. The Impact of Financial Literacy Training for Migrants and their Families Yoko Doi, David McKenzie, and Bilal Zia There has long been a concern Group C: both the migrant and their family among policymakers that too much of worker received training; remittances are consumed and too little Group D: control group, in which neither saved, limiting the development impact of the migrant nor their family member were migration. Financial literacy programs have trained. become an increasingly popular way to try and address this issue, but to date there is no The training consisted of a 2 days (18 evidence that they are effective in inducing hours) for the migrant worker and/or 2 half- savings among remittance-receiving days (8 hours) for their family member. households, nor is it clear whether such Training covered financial planning and programs are best targeted at the migrant, management, budgeting, savings, debt the remittance receiver, or both. management, sending and receiving A pilot program on financial literacy remittances, and understanding insurance, for overseas migrant workers and their all adapted to the local context. Training was families developed as a partnership between designed to be participative, interactive, and the Government of Indonesia and the World applied, and included comic books, Bank and implemented in Greater Malang brochures, and budget templates. Attendance area and Blitar District of East Java was high, with 76-91% of those invited Province offered the opportunity to test attending. whether it matters who you train. Follow-up Surveys The Experiment Three follow-up surveys were Our pilot worked with 400 conducted, at time intervals corresponding Indonesian migrant workers and their to the migrant being 9, 15, and 19 months households. Almost all of the workers were abroad on average. Attrition rates were very women, about to go abroad to work as low, ranging from 2-9%. housemaids in Hong Kong, Malaysia, A crucial point to note is that these Singapore, and Taiwan. Before they go surveys only covered the family members abroad, their recruiting agencies typically left behind, so tell us the impact of the provide some training on job-related training on the remaining family, but not matters. that on the migrant herself. Workers were randomly assigned into one of four groups: Results Group A: financial literacy training was  Training both the family member and provided to the migrant worker only. the migrant together had the largest Group B: financial literacy training was effects: increasing awareness of provided only to the family member of the financial concepts of the family member worker who would be responsible for receiving remittances. by 19 percentage points (p.p), Do you have a project you want evaluated? DECRG-FP researchers are always looking for opportunities to work with colleagues in the Bank and IFC. If you would like to ask our experts for advice or to collaborate on an evaluation, contact us care of the Impact editor, David McKenzie (dmckenzie@worldbank.org) knowledge of remittance costs by 8 p.p; Timing matters: the pre-departure and use of budgeting by 6 p.p. More training of migrants in job-specific skills knowledge and behavior change resulted makes it logistically a good time to also provide financial literacy training to them in a 10 p.p. increase in the likelihood of and their families; Moreover, it seems likely saving, a 9 p.p. reduction in the this is a good “teachable moment�, likelihood of borrowing, and a doubling providing families with key knowledge just of the amount of remittances used for before they are about to start receiving much saving. larger amounts of money than they are used  Training only the family member had to dealing with, and before they have had a more modest effects: it increased chance to form habits on how they use this money. financial awareness by 12 p.p., and “How to save� may be more knowledge of remittance costs by 5 p.p., important than “how to remit�: the training but only had an insignificant 3 p.p. led to no change in the amount remitted or increase in budgeting, and did not channels used for remitting, which is change significantly the likelihood of consistent with the intervention discussed in savings or taking a loan, and only had Impact note 18. The gains from such remittance-specific knowledge may be much about half the impact on savings levels less than the gains from learning how to as when the migrant is also trained. save and budget and getting migrants and  Training the migrant only has very their families to use the money they have little impact on remaining family more effectively, rather than just savings on members: it may help the migrant, but transactions costs. the remaining family members receive Involve the family: much of the policy efforts in this area have focused on no more in remittances, don’t build up just providing financial literacy training to savings, nor do they show much change the migrant – either at pre-departure in financial knowledge. seminars, or through sessions for the migrants while they are abroad. This pilot Implications suggests the gains will be much larger if the There are important family remaining can be involved too. complementarities in training: Since These results are very promising, and Indonesian migrants are going abroad on provide a clear case where training results in temporary contracts, the savings decisions of more savings and less debt. It is a context household members left behind affect both where education levels are low and the the remaining household members and the migrants are women remitting to their migrant. It may be that both the desire to husbands or parents – future studies are change savings behaviors and the ability to needed to see how widely these findings put this new knowledge into effect is much apply to other types of migrant groups. greater when both the remittance sender and the receiver have this training. For further reading see: Yoko Doi, David McKenzie and Bilal Zia “Who You Train Matters: Identifying Complementary Effects of Financial Education on Migrant Households �, World Bank Policy Research Working Paper no. WPS6157 Recent impact notes are available on our website: http://econ.worldbank.org/programs/finance/impact