Working Daily, Paid Monthly? Effects of On-Demand Wage Access on the Financial Engagement of Low-Wage Workers

Practice- and Policy-Oriented Abstract (for Research Spotlight) Low-wage workers often face liquidity constraints, relying on costly short-term credit options such as payday loans. On-demand wage access (OWA) platforms offer a promising alternative by allowing workers to access earned wages before traditional pay cycles. This study examines whether OWA enhances financial engagement among low-wage workers and investigates the mechanisms driving these effects. Using transaction data from about 4,000 users of a U.S.-based OWA platform, we employ a difference-in-differences approach with staggered adoption to identify behavioral changes. To enrich our analysis, we supplement these data with evidence from an online experiment, a survey of OWA users, and semistructured interviews exploring psychological and contextual mechanisms. Our findings show that OWA adoption increases monthly saving frequency by 3.7%, time spent monitoring financial dashboards by 12.9%, and goal-setting activity by 1.3%. These effects are amplified in regions with lower minimum wages or limited banking access but weakened among users who frequently incur fees for instant withdrawals. We identify self-empowerment—beyond mere self-efficacy—as the key mechanism enabling a shift from reactive to proactive financial management. By demonstrating how digital affordances foster behavioral change within structural constraints, this research offers actionable insights for employers, OWA providers, and policymakers seeking to promote financial inclusion.