participants the payroll accounts group are able to mobilize new savings by reducing consumption. When we disaggregate the results by type of consumption, we find that this reduction in expenditures is concentrated entirely in discretionary spending, while food consumption remains constant. In column (9), we additionally consider larger purchases of more than BDT 1,000 (approximately 20% of the median monthly wage). The results indicate a statistically significant decrease in such larger purchases for our treatment group relative to the cash wage payments control group. However, we cannot statistically distinguish the treatment effects between the payroll account and account groups (p-values 0.561 and 0.966).

**Shock mitigation.** Summary statistics from our baseline survey highlight the fact that many workers face savings constraints and find it difficult to smooth consumption across the month.<sup>44</sup> Given that direct deposits increase savings and appear to decrease spending on discretionary goods, it is natural to ask whether they also help workers smooth consumption and mitigate large financial shocks. In Table 6, column (10) we consider the impact of payroll accounts on the ability to mitigate unanticipated income shocks. The results indicate that participants in the payroll accounts treatment group experience significantly fewer economic shocks that they are unable to mitigate with existing precautionary savings. However, we cannot distinguish the effect in the payroll account group from that of the account only group. We report additional results on mechanisms for smoothing consumption in Appendix Table D.12, which reports treatment effects on earnings and work satisfaction. In line with the results on shock-mitigation we find that, at endline, workers in the payroll account group are much less reliant on salary advances to at the end of the month. This is consistent with the increase in precautionary savings and reduction in discretionary spending in the payroll account group that we have documented above.

Taken together, our results on the real effects of payroll accounts are consistent with the prior literature and suggest that through more intensive engagement with the financial technology, payroll accounts increase savings on the intensive and extensive margin and improve the ability to cope with unanticipated income shocks. These positive impacts may reflect greater availability of precautionary savings documented above. Another interpretation is that the use of mobile payments might facilitate the receipt of transfers as well as strengthen and expand informal insurance networks among poor households (Jack and Suri, 2014). This is somewhat less likely in our setting, as workers in large factories are generally net senders of remittances. However, we do find some evidence that payroll accounts increase likelihood of receiving money through the accounts.

# **4.3 Heterogeneity: Who Learns to Navigate the Technology?**

We document above that the introduction of payroll accounts increases account use and engagement and also leads to more efficient use of the new technology. However, from a regulatory perspective

> 44Nearly half of our sample needs to borrow to smooth consumption at the end of the month, 22% of our study participants report that they would not be able to save BDT 5,000 (approximately US$ 60) over a six-month period.

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