Employment and training (E&T) contexts provide opportunities to deliver financial capability interventions to adults with low incomes, but there is little evidence on the effectiveness of this channel. To address this gap in knowledge, OPRE launched the “Integrating Financial Capability and Employment Services” project, which will study the extent of financial capability interventions in E&T programs, key features of such programs, the factors that have led to their inclusion, and what evidence exists on the effectiveness of such interventions in the E&T context.
This brief looks at research on the integration of E&T services and financial capability interventions and their effects on economic outcomes for adults with low incomes. A growing body of evidence shows that financial capability programs and services may have some positive effects on participants’ financial well-being and that financial capability interventions and E&T programs might work together well to improve financial and economic outcomes for adults with low incomes in numerous ways.
- Research Questions
- What studies have evaluated the impacts of financial coaching, counseling, or education on financial outcomes among employment program participants?
- What are the research gaps in these areas and options for future research and evaluation to address these gaps?
Adults with low and moderate incomes face many economic challenges, such as financial instability and barriers to upward mobility, that are in part a result of low wages and limited employment opportunities. Limited knowledge of financial concepts and access to financial products and services can worsen these challenges. To help improve the financial lives of people with lower incomes, public policy funds both E&T programs and financial capability interventions (i.e., programs and services that help people build the capacity to manage their finances).
Financial capability interventions can improve economic outcomes for households with low incomes by building families’ financial skills and knowledge and expanding their access to financial resources. E&T programs provide opportunities to deliver these interventions, but there is currently little evidence on how effective E&T programs are in this role.
This literature synthesis describes the current state of knowledge relevant to existing and potential efforts to deliver financial capability interventions together with E&T programs. It is part of a larger study that aims to build more systematic evidence for policymakers and practitioners about the extent, forms, and practices of placing financial capability interventions in E&T programs serving adults with low incomes; identify research gaps; and help set up a basis for future research and evaluation in this area.
- Key Findings and Highlights
- A growing body of evidence finds that financial capability programs and services may have some positive effects on participants’ financial well-being, but program models vary widely and impacts differ across both outcomes and populations studied.
- Evidence and theory from both the financial capability literature and research on low-wage work and employment services suggest numerous ways in which financial capability interventions and E&T programs might work well together to bring about improvements in financial and economic outcomes for adults with low incomes.
- Over at least the past 15 years, recognition has grown among practitioners and policymakers of the potential value of offering integrated services—focused on creating connections between financial capability and workforce programming—which has led to numerous new integrated programs and models.
- There is limited research specifically examining the implementation and effectiveness of programs that integrate financial capability interventions into E&T programming. This paper suggests promising directions for future studies.
This literature synthesis, in two parts, reflects the scope and rigor of the current literature. It first reviews research on financial capability interventions and their effects, focusing on programs that served or targeted adults with low incomes. Here, the brief cites recent rigorous studies with experimental and causal evidence that show whether a program or service causes a specific financial outcome, with a focus on peer-reviewed journal articles published in the past 10 years.
The brief then reviews practices and emerging research on financial capability interventions combined with workforce programs (or “integrated programs”), including employment services within the Temporary Assistance for Needy Families (TANF) program. Compared with literature on financial capability programs, the literature on integrated programs is less established. As a result, peer-reviewed journal articles were searched, as well as gray literature, unpublished papers, and organization reports to identify rigorous studies with causal evidence that can show whether a specific integrated program improves financial or employment outcomes. More rounds of searches were conducted using the citations found in studies recommended by experts and in our searches of journal articles and organizational reports.
Several promising paths exist for further research:
- Additional research could support evidence-based policy and program decisions regarding program integration. Currently, a thin body of causal evidence examines the impacts of integrating financial capability interventions in E&T programs on financial and employment outcomes of participants.
- Careful research that can separately identify and precisely calculate any interaction effects from integrating financial capability interventions in E&T services would be valuable for building knowledge and informing policy and practice.
- Additional research could look at the needs (skill development, workforce reentry, etc.) for different populations with low incomes in different employment contexts (matching to jobs, staying employed, etc.) and examine what forms of interventions (financial coaching, credit building, etc.) are most effective. Research is also needed to understand how different forms of integration—referrals versus partnerships, for example—and different aspects of implementation affect program outcomes.
- Additional research exploring the decision to participate and what it means for program outcomes may be valuable to build evidence on why workers with low incomes do or do not decide to participate in financial capability services.
- Little current research measures program costs or compares the effectiveness of different programs. Cost-benefit, cost-effectiveness, or comparative effectiveness research would allow for comparison with a wider set of alternative services for these populations and support policy decision making to most efficiently and effectively improve the economic stability and advancement of adults with low incomes.
Treskon, Mark, William J. Congdon, Kassandra Martinchek, and Alexander Carther (2021). Integrating Financial Capability into Employment Services: Literature Synthesis, OPRE Report #2021-04, Washington, DC: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services.
Employment and training (E&T): E&T programs include a wide range of programs and services that aim to help people build skills and get jobs to improve employment and earnings outcomes and, ultimately, financial security and economic stability. Two important categories of E&T programs that serve large numbers of adults with low incomes include the E&T parts of public safety net programs and the elements of the public workforce system that target adults with low incomes.
Financial capability: The capacity, based on knowledge, skills, and access, to manage financial resources effectively.