Improving Financial Literacy of the Poor and Vulnerable in Indonesia: An Empirical Analysis
AbstractAs part of an Inclusive Workforce Development project sponsored by USAID/Indonesia, we describe outcomes of a training-of-trainers program in financial literacy and soft skills designed to improve employability of poor and vulnerable Indonesians aged 18 – 34. Twenty-five teachers received training in Jakarta in December 2017, and subsequently conducted three-day trainings for 601 students in West Java in early 2018. The primary treatment group consisted of students enrolled in vocational programs offered by local public and private agencies and post-secondary polytechnic institutions. The level of education varied widely for both teacher-trainers and students.
Initial teacher training occurred during a week-long workshop covering both personal finance and personal soft skills topics. The financial literacy curriculum was developed and taught by three economists specializing in economic education, while the soft skills curriculum was adapted and overseen by professionals from the International Youth Foundation, an economic development consultancy.
The teacher-trainers then taught the curriculum over a three day period at their home institutions. In addition to basic demographic information, all participating teachers and students were assessed on changes in financial literacy knowledge, on changes in self-perceptions about the acquisition of soft skills, on attitudes and behavior relating to financial literacy, and on the relevance and quality of the training. Our findings indicate that the program resulted in statistically significant increases in financial literacy knowledge for both the trainers and the students, and that there was widespread satisfaction with the program. Student perceptions about their acquisition of soft skills increased significantly as well.
Student financial literacy knowledge increases were found to relate to prior knowledge, work experience, the type of school they attend, the perceived acquisition of soft skills, and the intention to incorporate the training into their daily lives. Because previous literature links financial literacy to improved worker productivity, decreased absenteeism, and entrepreneurial success, these findings are encouraging both for the students involved and for their workplaces in Indonesia.