Journal of Gerontological Social Work, 58:114–127, 2015 Copyright © Taylor & Francis Group, LLC ISSN: 0163-4372 print/1540-4048 online DOI: 10.1080/01634372.2014.923085
Financial Capability, Asset Ownership, and Later-Age Immigration: Evidence From a Sample of Low-Income Older Asian Immigrants YUNJU NAM School of Social Work, University at Buffalo, the State University of New York, Buffalo, New York, USA
EUN JEONG LEE Senior Community Service Employment Program, National Asian Pacific Center on Aging, Seattle, Washington, USA
JIN HUANG School of Social Work, Saint Louis University, St. Louis, Missouri, USA
JUNPYO KIM School of Social Work, University at Buffalo, the State University of New York, Buffalo, New York, USA
We examined financial capability and asset ownership among low-income older Asian immigrants with special attention given to later-age immigrants who came to the United States when they were 55 years old or older. Survey data collected from supported employment program participants ( N = 150) were used. The analyses demonstrated a low level of financial knowledge and asset ownership in the sample. The findings also indicated that later-age immigrants’ financial-management skills, knowledge of social programs, and asset ownership were significantly lower than those of young-age immigrants. These findings call for active interventions to enhance economic security among low-income older Asian immigrants. KEYWORDS wealth, immigration
economic
security,
elderly,
age
at
Received 26 September 2013; revised 6 May 2014; accepted 7 May 2014. Address correspondence to Yunju Nam, University at Buffalo, State University of New York, School of Social Work, 685 Baldy Hall, Buffalo, NY 14260-1050, USA. E-mail: [email protected] 114
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Assets and savings are essential for long-term economic security among older adults. Although Social Security benefits provide crucial economic resources for older adults in the United States, they do not fully satisfy older adults’ economic needs: The average Social Security income covers 61% of basic consumption needs among older women and 81% of these needs among older men (Wider Opportunities for Women & University of Massachusetts Boston, 2011). Older adults need to fill these economic gaps with savings and asset income (e.g., interests). However, only 54% of older adults have asset income (Purcell, 2009). Older immigrants also need more savings and assets because approximately 70% of them receive Social Security benefits, but almost all native older adults do so (Borjas, 2009). Among older immigrants, those who came to the United States at a later stage of life (later-age immigrants) are more vulnerable than others because they are less likely to have accumulated 10 years of work experience required for Social Security eligibility. We, however, know little about asset ownership and financial capability among older immigrants, especially later-age immigrants. According to a relatively new theoretical framework, financial capability is a key element for asset accumulation and ownership. This theory of financial capability argues that it is essential for individuals to have access to appropriate financial services to accumulate assets (Huang, Nam, & Sherraden, 2013; Sherraden, 2013), whereas the traditional approach focuses solely on financial literacy, or individual capability to make good financial decisions (Huston, 2010). Together, financial literacy and financial access contribute to an individual’s financial functioning in ways that lead to improved financial well-being (Sherraden, 2013). Previous studies illustrate that immigrants’ financial capability is limited because they are financially excluded. Immigrants’ knowledge of financial issues and the US financial system is low, especially among those with little education and limited English proficiency (Patraporn, Pfeiffer, & Ong, 2010). Immigrants face various barriers to US financial services. They have the same obstacles as disadvantaged native groups, such as the high costs of banking services (e.g., high account maintenance fees), but also have unique constraints, such as documentation requirements (e.g., Social Security number), communication difficulties in the absence of bilingual services, and discriminatory treatment (Osili & Paulson, 2008; Paulson, Singer, Newberger, & Smith, 2006). Immigrants from countries with fragile financial infrastructures may also distrust financial institutions (Paulson et al., 2006). Using data from nonelderly populations, several studies show that immigrants have lower levels of asset ownership than natives for all types of wealth, including home ownership (Borjas, 2002; Paulson et al., 2006); savings accounts, retirement savings, and stock ownership (Osili & Paulson, 2008); and net worth (Amuedo-Dorantes & Pozo, 2002; Cobb-Clark & Hildebrand, 2006). We have identified two existing studies that focused on older immigrants. Using a sample of older Mexican Americans, Burr, Mutchler, and Gerst (2011)
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found that home-ownership rates were higher among native Mexican older adults than among their immigrant counterparts. Sevak and Schmidt (2007) reported that older immigrants’ net worth and home-ownership rates were significantly lower than those of older natives. To our best knowledge, there is no quantitative study on whether and how financial capability and asset ownership differ by age at immigration. Not everyone argues for immigrants’ vulnerability, though. Based mostly on qualitative data, some researchers focus on the negative impacts of consumption-oriented culture in the United States and argue that immigrants, especially later-age immigrants, may have an advantage in accumulating assets. Wang (2012) showed that first-generation immigrants are less likely to borrow and to file for bankruptcy than second-generation and 1.5-generation (i.e., those who were born abroad but raised in the United States) immigrants. Yang and Solheim (2007) demonstrated that first-generation refugees maintain frugal lifestyles and save relatively large sums of money, despite their meager incomes. Members of the 1.5 generation are the most successful financially; they maintain a prudent consumption style while making judicious investment decisions via their knowledge of US financial systems. Conversely, the second generation spends more and rarely saves. These two studies suggest that acculturation into the US consumption-oriented culture may hamper asset accumulation among young-age immigrants and their children, and that later-age immigrants may be in a better position to accumulate assets than young-age immigrants. Building on the existing literature, we examine financial capability and asset ownership among low-income older Asian immigrants in the United States. This study makes the following contributions to the literature. First, we focus on older immigrants from Asia. Most previous studies paid attention mainly to younger immigrants. Older immigrants are at a different stage of life and have different needs and motivations for saving, when compared to their younger counterparts. A few studies cover asset ownership among older immigrants (Burr et al., 2011; Sevak & Schmidt, 2007), but none pays attention to those from Asia. Second, we investigate various indicators of asset ownership and financial capability, such as financial literacy and management. In this way, this study differs from the two existing studies on older immigrants that examine only homeownership and net worth (Burr et al., 2011; Sevak & Schmidt, 2007). In addition, we pay special attention to later-age immigrants who came to the United States at a later stage of their lives. Later-age immigrants are economically vulnerable because, unlike younger-age immigrants, they have a smaller chance of accumulating the 10 years of work experience and of being eligible for Social Security. However, it is unclear whether later-age immigrants are more likely to have accumulated assets than young-age immigrants. Those concerned about financial exclusion among immigrants expect later-age immigrants are more financially vulnerable than young-age immigrants because they have less chance to become acculturated to the US
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culture in general and to financial system in particular. Alternatively, those concerned about the US consumption-oriented culture predict better financial outcomes among later-age immigrants because they have less chance to be exposed to consumption-oriented culture and are more likely to maintain their frugal lifestyles (Wang, 2012; Yang & Solheim, 2007).
METHODS Data and Sample We use survey data collected from participants in a supported employment program: Senior Community Service Employment Program (SCSEP) operated by the National Asian Pacific Center on Aging (NAPCA). SCSEP is an employment and training program funded by the Department of Labor. SCSEP provides community service jobs for program participants and guides them into unsubsidized employment. SCSEP serves older adults (55 years old or older) whose income is less than 125% of the federal poverty threshold. Most participants in NAPCA’s SCSEP are Asian immigrants. NAPCA currently operate SCSEP in seven states. We conducted a survey at three locations: Los Angeles and Orange County in California and New York City in New York. The survey questionnaire was first developed in English and then translated into Chinese and Korean. Each translated questionnaire was back-translated into English. The design of the survey research was approved by the Social and Behavioral Science Institutional Review Board at the University at Buffalo (Study #4759). In March 2012, data was collected with the use of a self-administered group survey. Questionnaires were distributed to SCSEP participants at quarterly meetings that SCSEP mandated participants to attend. Accordingly, almost all SCSEP participants had the opportunity to participate in the study. Bilingual survey administrators attended the meetings and explained the study; they also informed participants of their right not to participate in the study. Of the 220 SCSEP participants who attended the meetings, 183 filled out the questionnaire, resulting in an 83% response rate. From these 183 cases, we deleted 23 from the analysis sample because they did not meet sample selection criteria (e.g., Hispanics); an additional 10 cases were deleted due to missing information in independent variables for the regression analyses. The final analysis sample size was 150.
Measures Dependent variables: Financial capability and asset ownership. The dependent variables were various measures of financial literacy, financial access, and asset ownership. These variables are identified as the main
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components of financial capability and long-term economic security in the theoretical framework of this study. We included three categories of financial literacy scales: financial knowledge, financial management, and social program knowledge. The financial knowledge scale was constructed with the number of correct answers to the four true-or-false questions on basic financial issues (e.g. “All banks give you the same rate of interest on your savings accounts.”). The potential range for this scale lies between 0 and 4, and Cronbach’s alpha was estimated to be 0.73. The financial management skill scale was generated from respondents’ own evaluations of the following two statements: “My family sets financial goals for our future” and “I keep track of my spending.” There were three answer categories: often true, sometimes true, and rarely true. This scale was created by averaging the answers to these two questions. The scale lies between 0 and 2, and Cronbach’s alpha was 0.55. The social program knowledge scale measured how well respondents understood the basic rules of Social Security and Medicare. Considering the crucial role of these two programs in older adults’ economic lives, understanding these programs is essential for long-term financial planning. This study created this scale by counting the number of right answers to five true-or-false questions (e.g., “Your Social Security benefit amount will be the same regardless of age of retirement.”). The scale ranged from 0 to 5, and Cronbach’s alpha was 0.70. Access to financial services is measured with three variables with which respondents evaluate mainstream financial institutions. The first two variables were the level of agreement with the following two statements with four answer categories (strongly agree, agree, disagree, and strongly disagree): “In general, I trust banks” and “It is easy to speak with bank staff members.” The third variable indicated how comfortable the respondent felt with opening a bank account with four answer categories (very uncomfortable to very comfortable). We created a series of variables for asset accumulation, asset ownership, and access to credit. First, the measure of asset accumulation is a dichotomous indicator of regular saving (1 for those who reported saving regularly and 0 otherwise). Second, we created five indicators of asset ownership: bank account (1 if the respondent or someone in the household had a checking or savings account); long-term savings (1 for those who reported owning one of the following liquid assets: savings account; money market account or certificate of deposit; retirement account; stocks or stock mutual funds; and corporate, municipal, government, or foreign bonds); home ownership (1 if the respondent or a household member owned a house); vehicle ownership (1 for those who owned a vehicle); and nonmainstream savings (1 for those with savings at home or with trusted friends or family members). Third, access to credit was measured with an indicator of major credit card ownership. Credit cards grant their owners easy and immediate access to credit by allowing them to carry a balance.
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Independent variable: Later-age immigrant indicator. The main independent variable was an indicator of later-age immigration. We divided the sample into later-age immigrants (i.e., those who immigrated to the United States at the age of 55 or older) and young-age immigrants. Among those who did not answer to the age-at-immigration question, a value was assigned if other information in the data provided a clear answer (e.g., a 69-year-old respondent with 21 years of work experience in the United States). We used an age cut-point of 55 years; those who come at this age or older likely have a hard time obtaining a mainstream job, because Americans begin to retire at age 55 (Blank & Ruggles, 1996). Control variables. This study includes demographics, human capital, household characteristics, visa status at entry into the United States, and survey location as control variables. We generated three demographics variables: the respondent’s age (younger than 65 years old; 65 years old and older; and missing value); gender (1 for female); and ethnicity (Chinese or Taiwanese; Korean; and other, e.g., Asian Indian, Filipino). Human capital variables included education (less than a high school diploma; a high school diploma; and a bachelor’s degree or higher), English proficiency (1 for those who reported speaking English somewhat or very well; 0 for others), and health status (1 for those who reported their health as excellent, very good, or good; 0 for fair or poor health). Household characteristics consisted of marital status and household size. Marital status had two categories (1 for currently married and 0 for other). Household size indicated the number of people in a respondent’s household (only one person; two people; and three or more). The visa status at entry variable had three categories: immigration visa; work, student, or business investment visa; and other (e.g., tourist visa). The survey location variable had three categories: Los Angeles, Orange County, and New York City.
Analytical Approaches We employed four different types of regression analyses, depending on the type of dependent variable: negative binomial regression for count variables (the financial knowledge and social program knowledge scales); ordinary least squares regression for continuous variables (the financial management scale); ordered-logit regressions for ordinal variables (the three access to financial services variables); and logit regressions for dichotomous variables (for regularly save, asset ownership, and credit card ownership). The main independent variable was the later-age immigrant indicator. The analysis model controlled for demographics, human capital, household characteristics, visa status at entry, and survey location, because they were expected to affect financial capability and asset ownership; these indicated one’s life stage, ability to obtain and understand new information, capability of adjusting to new environments, earning capability, and consumption
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needs (Beverly et al., 2008). Visa status at entry may indicate one’s chance of having been an undocumented immigrant, which likely affects one’s financial well-being. Those who enter with a visa for a short-term stay (e.g., a tourist visa) are more likely to become undocumented than those with a visa for a long-term stay (e.g., an immigration visa). The survey location captured differences in living environments (e.g., labor market conditions). Each regression excludes cases with a missing value in either dependent or independent variables from an analysis sample. We did not control for earnings and family income in our analyses. As SCSEP participants, all respondents were paid local minimum wage and reported working 20 hr a week. Therefore, earnings differed only by survey site. Only those with an income of 125% or less of the poverty threshold are eligible for SCSEP; variations in family income were small. In addition to the main analysis model, we ran supplemental analyses as robustness tests. First, we ran analyses using a later-age immigrant indicator with a different age cut-point (i.e., 50 years instead of 55 years). Second, we employed alternative statistical methods: Poisson regression for count variables, ordered probit for ordinal variables, and probit regressions for dichotomous variables. Third, we ran models with two alternative measures: (1) living arrangements (living alone, living only with spouse, or other) rather than household size; and (2) an ordinal variable (rather than the dichotomous one) to assess English proficiency (i.e., very well, somewhat well, not too well, or not at all). The results of most supplemental analyses were substantially identical to those of the main analyses, with a few exceptions. (The full results of the supplemental analyses are available from the authors.)
FINDINGS Sample Characteristics Table 1 compares later-age immigrants with young-age immigrants. Laterage immigrants were more likely to belong to the older group, less likely to be women, and less likely to be Korean than young-age immigrants. In terms of household characteristics, the former were significantly more likely to be married and to live in a large-size household (i.e., three or more members). All three measures of human capital (i.e., education, health, and English proficiency) were not significantly different between the two groups. In terms of visa type at entry, later-age immigrants were much more likely to hold an immigration visa than young-age immigrants.
Descriptive Statistics on Financial Capability and Asset Ownership Table 2 presents the outcome measures in the sample. The analysis results in Table 2 included only cases with valid information for each dependent variable; therefore, sample sizes differed across analyses, as shown in the
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TABLE 1 Sample Characteristics by Age at Immigration Young-Age Immigrants
Later-Age Immigrants
Total
53.93 35.96 10.11 62.92
32.79 62.30 4.92 49.18
45.33 46.67 8.00 57.33
32.58 46.07 21.35 47.19
31.51 27.87 40.98 78.69
32.00 38.67 29.33 60.00
34.83 41.57 23.60
6.56 45.90 47.54
23.33 43.33 33.33
17.98 44.94 37.08 70.79 40.45
13.11 44.26 42.62 68.85 42.62
16.00 44.67 39.33 70.00 41.33
66.29 16.85 16.85
83.61 3.28 13.11
73.33 11.33 15.33
44.94 22.47 32.58 89 (59.33)
50.82 8.20 40.98 61 (40.67)
47.33 16.67 36.00 150 (100)
Age (%)∗∗∗ < 65 years ≥ 65 years Missing Female (%)∗ Ethnicity (%)∗∗ Chinese or Taiwanese Korean Other Currently married (%)∗∗∗ Household size (%)∗∗∗ 1 member 2 members 3 or more Education (%) Less than high school High school diploma BA or higher Good health (%) English proficiency (%) Entry visa status (%)∗∗ Immigration Worker or student Other Survey location (%)∗ Los Angeles Orange County New York City Sample size (%) ∗
p < 0.1.
∗∗
p < 0.05.
∗∗∗
p < 0.01.
last column. Analysis results clearly demonstrated the precarious financial status of older Asian immigrants, especially of later-age immigrants. Typical respondents in the full sample provided approximately one correct answer to the four basic financial questions. The mean financial knowledge scale rating was 0.87 among later-age immigrants and 1.16 among young-age immigrants. The mean financial management scale score was 1.00 for the entire sample, 0.93 for later-age immigrants, and 1.05 for young-age immigrants. The social program knowledge scale demonstrated a statistically significant difference between later- and young-age immigrants: the mean was 1.43 among the former and 2.73 among the latter. In terms of access to financial services, a very high percentage (around 90%) agreed or strongly agreed that they trusted financial institutions. It is of interest that later-age immigrants were more likely to trust banks than young-age immigrants (96% vs. 88%). Approximately 90% agreed or strongly agreed that it was easy for them to talk with bank staff members, and nearly 80% felt very comfortable or somewhat comfortable to open a bank account.
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TABLE 2 Financial Capability and Asset Ownership by Age at Immigration
Financial literacy Financial knowledge (mean) Financial management (mean) Social program knowledge (mean)∗∗∗ Access to financial services In general, I trust banks (%) Strongly disagree Disagree Agree Strongly agree It is easy to speak with the bank (%) Strongly disagree Disagree Agree Strongly agree Comfort level with opening a bank account Very uncomfortable Somewhat uncomfortable Somewhat comfortable Very comfortable Asset accumulation and ownership Regularly save (%) Bank account ownership (%) Long-term savings ownership (%)∗ Vehicle ownership (%)∗∗∗ Home ownership (%)∗ Savings at home or with friends (%) Major credit card ownership (%) ∗
p < 0.1.
∗∗
p < 0.05.
∗∗∗
Young-Age Immigrants
Later-Age Immigrants
Full Sample
Sample Size
1.16 1.05 2.73
0.87 0.93 1.43
1.04 1.00 2.20
150 110 150
4.94 7.41 71.60 16.05
0.00 4.17 77.08 18.75
3.10 6.20 73.64 17.05
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1.45 7.25 72.46 18.84
0.00 9.52 80.95 9.52
0.90 8.11 75.68 15.32
111
7.14 15.71 18.57 58.57
10.00 10.00 25.00 55.00
8.18 13.64 20.91 57.27
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17.98 83.15 41.57 44.94 25.88 0.00 41.57
9.84 73.77 26.23 19.67 14.04 1.64 37.70
14.67 79.33 35.33 34.67 21.13 0.67 40.00
150 150 150 150 142 150 150
p < 0.01.
However, saving and asset ownership rates are low. A very small percentage (15%) reported that they saved regularly. Although the majority had bank accounts, a substantial portion of the minority (21%) was unbanked, especially among later-age immigrants (26%). About one-third had long-term savings, and the difference was significant between later- and young-age immigrants (26% versus 42%). Similarly, vehicle- and home-ownership rates were low in the entire sample and lower among later-age immigrants as compared with young-age immigrants. Older Asian immigrants rarely had savings at home or with trusted friends or family members: Less than 1% of participants reported to have this type of savings. Access to credit was limited as indicated by rates of credit card ownership (40%).
Regression Analysis Results Table 3 summarizes the regression analysis results. We could not run a regression analysis on savings at home or with trusted friends, because this variable
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Financial Capability, Asset Ownership, and Later-Age Immigration TABLE 3 Regression Analysis Results for Age at Immigration Later-Age Immigrants Dependent Variables Financial knowledge scale Financial management scale Social program knowledge scale Trust banks Easy to talk with bank staff Comfort with opening an account Regularly save Bank account ownership Long-term savings ownership Vehicle ownership Home ownership Credit card ownership
Coef.
p-Value
Model Fit
Sample Size
−0.215 0.259 −0.326 0.170∗ −0.597 0.146∗∗∗
0.406 0.059 0.000
Pseudo R = .05 Adj. R2 = .09 Pseudo R2 = .11
150 110 150
1.051 0.538∗ 0.258 0.633 −0.389 0.535
0.051 0.684 0.467
Pseudo R2 = .12 Pseudo R2 = .08 Pseudo R2 = .07
129 111 110
−0.625 −1.071 −1.289 −1.340 −0.547 −0.721
0.332 0.081 0.014 0.011 0.332 0.115
Pseudo Pseudo Pseudo Pseudo Pseudo Pseudo
SE
0.644 0.614∗ 0.526∗∗ 0.530∗∗ 0.564 0.457
2
R2 R2 R2 R2 R2 R2
= = = = = =
.14 .26 .19 .24 .13 .12
125 150 150 150 142 150
Note. Coef. indicates coefficient and SE denotes standard error. Each regression controls for demographics (age, gender, and ethnicity), human capital (education, English proficiency, and health status), household characteristics (marital status and household size), visa status at entry, and survey location. ∗ p < 0.1. ∗∗ p < 0.05. ∗∗∗ p < 0.01.
did not have enough variation. As described in the Methods section, our analysis model controls for demographics, human capital, household characteristics, and other factors. Table 3 reports only main findings: the coefficient and standard error of the later-age immigrant indicator, the model fit of each analysis (adjusted R 2 or pseudo R 2 ) and the sample size for each analysis. Because regressions exclude cases with missing values for either independent or dependent variables, sample sizes differ across analyses. Adjusted R2 or pseudo R 2 statistics range from 0.05 to 0.26. Regression analyses produced expected results for control variables. College education had significantly positive associations with the financial knowledge scale, the social program knowledge scale, and one’s chance of owning a bank account and a credit card. English proficiency showed significantly positive associations with bank account and credit card ownership. (Full analysis results are available upon request.) Table 3 showed that later-age immigrants were less economically secure than young-age immigrants in general. The coefficients of the later-age immigrant indicator were significantly negative for financial management (p = 0.059) and for the social program knowledge scale (p = 0.000). Similarly, later-age immigrants are significantly less likely to have bank accounts (p = 0.081), long-term savings (p = 0.014), or a vehicle (p = 0.011). Later-age immigrants did not differ significantly at the 0.1 level of statistical significance from young-age immigrants in terms of their chance of saving regularly and of owning home or credit cards. Results regarding access to financial services were somewhat unexpected. The coefficient of later-age immigrant
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was significantly positive for the level of trust toward banks, which suggests that later-age immigrants showed a higher level of trust in mainstream financial institutions than young-age immigrants did. The two groups of older Asian immigrants were not significantly different in terms of the ease of talking with bank staff members and of the comfort level with opening a bank account. Results from most supplemental analyses were substantively identical to those reported here, with some exceptions. Results for the level of trust in banks and the ownership of bank accounts, long-term savings, and vehicles demonstrated that the alternative measure of the later-age immigrant indicator was not statistically significant when we used a cut-off point of age 50.
DISCUSSION This study examined long-term economic security among low-income older Asian immigrants by investigating financial capability and asset ownership. We also tested whether later-age immigrants were more financially secure than young-age immigrants. The financial exclusion perspective argues that later-age immigrants have less of a chance to be incorporated into the US financial system, and therefore have lower chances of accumulating assets than young-age immigrants. Those concerned about consumption-oriented culture claim that later-age immigrants have advantages because they are less likely to have acquired habits of overspending under the influence of US culture. Analysis results demonstrated precarious economic conditions among low-income older Asian immigrants as shown in low levels of financial knowledge and understanding of social programs, low percentage of regular savers, and low asset ownership rates for long-term savings, vehicles, and homes. These results are consistent with existing studies that show immigrants’ low levels of financial literacy and asset ownership (AmuedoDorantes & Pozo, 2002; Borjas, 2002; Cobb-Clark & Hildebrand, 2006; Paulson et al., 2006). Comparisons between later- and young-age immigrants suggested that the former were more precarious financially. Bivariate analyses indicates that the former have a significantly lower level of understanding of social programs and lower rates of owning long-term savings, a vehicle, or home. Regressions generate stronger associations between life-stage at immigration and financial conditions, suggesting that bivariate analyses could not reveal the true associations because of different age, ethnic, and other compositions between the two groups. Regression analyses indicated that life-stage at immigration has significant associations with financial management skills and bank account ownership, in addition to the dependent variables shown
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to be significant in bivariate analyses. Homeownership is an exception, though. Findings suggest that later-age immigrants are less knowledgeable about social programs, manage their finances less efficiently, and are less likely to own a bank account, long-term savings, and a vehicle than youngage immigrants. These findings support the argument of financial exclusion perspective. One surprising exception was that later-age immigrants had a significantly higher level of trust toward banks than young-age immigrants. This may be explained by the fact that immigrants with a greater chance of having direct experience with the US banking system (i.e., young-age immigrants) may have developed more negative views if they experienced excessive overdraft fees, rejected mortgage applications, or disrespectful treatment at a young age in financial institutions. This explanation is speculative and should be tested in future studies. This study does have limitations. First, the sample is not a probability sample, and thus may not be representative of low-income older Asian immigrants. The sample consisted of NAPCA’s SCSEP participants, who are likely different from older Asian immigrants who are not served by community organizations. Data were collected at three sites in areas with high proportions of Asian immigrants and with active Asian communities. Second, this study was unable to fully explore ethnic diversity in the sample, because the subgroup sizes of other ethnic groups (e.g., Filipino) were too small for separate analyses. The findings of this study have implications for future research. Researchers should pay attention to economic and other challenges among older Asian immigrants. Existing social and economic research has examined this population less than other racial and ethnic minorities, perhaps because of the model minority myth, which suggests Asian Americans are successful and problem-free (Sakamoto, Goyette, & Kim, 2009). The financial vulnerability revealed in this study calls for further investigation on older Asian Americans, especially those living in areas with small immigrant populations. Researchers also need an in-depth understanding of the financial incorporation process among immigrants, including facilitators and obstacles to financial success. This study’s findings have policy and practice implications. The economic vulnerability demonstrated here calls for active public policies and services that enhance long-term economic security among older Asian immigrants, especially later-age immigrants. A high proportion of older Asian immigrants without appropriate economic resources will likely impose negative effects on immigrant families and their communities and governments, as well as on older immigrants themselves. Accordingly, we should develop and adopt social policies and programs that assist older Asian immigrants, especially later-age Asian immigrants, in preparing for their postretirement economic needs as early as possible. The employment training program,
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such as SCSEP, may be an effective tool in promoting this population’s long-term economic security. As a federally-funded workforce program for low-income unemployed older adults, SCSEP provides subsidized work opportunities toward unsubsidized employment while helping program participants accumulate Social Security credits. Financial capability-building programs may enhance economic prospects of this population. On one hand, financial literacy education and planning services will improve financial knowledge and management skills, key components of asset-accumulation. Because of their financial vulnerability, older immigrants should be a target group for these services. On the other hand, governments and community organizations should work with financial institutions to expand older immigrants’ access to financial services. In developing financial capability building policies and programs, ethnic community-based organizations (CBOs) will play critical roles. Ethnic CBOs are knowledgeable about ethnic culture and can provide culturally-suitable programs and services in immigrants’ native languages. Ethnic CBOs would be efficient coordinators between older Asian immigrants and the US financial system because they understand both ethnic communities and mainstream financial institutions.
ACKNOWLEDGMENTS We are thankful to Christine Takada, Miriam Suen, Helen Jang, Norman Lee, Junghee Han, Xiao-Yu Yang, Kerry Situ, and Yong-Jin Ahn for their assistance with data collection. We are grateful to Ya-Ling Chen, Amanda Brower, and Sarah Nesbitt for their research assistance. This study was approved by the Social and Behavioral Science Institutional Review Board of the University at Buffalo (Study #4759).
FUNDING This study was supported in part by grants from the Les Brun Research Endowment Fund, Buffalo Center for Social Research, School of Social Work, University at Buffalo, and the Civic Engagement Research Dissemination Fellowship Program, University at Buffalo.
REFERENCES Amuedo-Dorantes, C., & Pozo, S. (2002). Precautionary saving by young immigrants and young natives. Southern Economic Journal, 69, 48–71. Beverly, S. G., Sherraden, M., Cramer, R., Shanks, T. R., Nam, Y., & Zhan, M. (2008). Determinants of asset holdings. In S.-M. McKernan & M. Sherraden (Eds.), Asset
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building and low-income households (pp. 89–151). Washington, DC: Urban Institute Press. Blank, R. M., & Ruggles, P. (1996). When do women use aid to families with dependent children and food stamps? The dynamics of eligibility versus participation. Journal of Human Resources, 31, 57–89. Borjas, G. J. (2002). Homeownership in the immigrant population. Journal of Urban Economics, 52, 448–476. Borjas, G. J. (2009). Economic well-being of the elderly immigrant population. Cambridge, MA: National Bureau of Economic Research. Burr, J. A., Mutchler, J. E., & Gerst, K. (2011). Homeownership among Mexican Americans in later life. Research on Aging, 33, 379–402. Cobb-Clark, D. A., & Hildebrand, V. A. (2006). The wealth and asset holdings of USborn and foreign-born households: Evidence from SIPP data. Review of Income and Wealth, 52, 17–42. Huang, J., Nam, Y., & Sherraden, M. S. (2013). Financial knowledge and child development account policy: A test of financial capability. Journal of Consumer Affairs, 47, 1–26. Huston, S. J. (2010). Measuring financial literacy. Journal of Consumer Affairs, 44, 296–316. Osili, U. O., & Paulson, A. (2008). Institutions and financial development: Evidence from international migrants in the United States. Review of Economics and Statistics, 90, 498–517. Patraporn, R. V., Pfeiffer, D., & Ong, P. (2010). Building bridges to the middle class: The role of community-based organizations in Asian American wealth accumulation. Economic Development Quarterly, 24, 288–303. Paulson, A., Singer, A., Newberger, R., & Smith, J. (2006). Financial access for immigrants: Lessons from diverse perspectives. Chicago, IL: Federal Reserve Bank of Chicago and the Brookings Institution. Purcell, P. (2009). Income and poverty among older Americans in 2008. Washington, DC: Congressional Research Service. Sakamoto, A., Goyette, K. A., & Kim, C. H. (2009). Socioeconomic attainments of Asian Americans. Annual Review of Sociology, 35, 255–276. Sevak, P., & Schmidt, L. (2007). How do immigrants fare in retirement? Ann Arbor: Michigan Retirement Research Center, University of Michigan. Sherraden, M. S. (2013). Building blocks of financial capability. In J. Birkenmaier, M. S. Sherraden, & J. Curley (Eds.), Financial capability and asset development: Research, education, policy, and practice (pp. 3–43). New York, NY: Oxford University Press. Wang, Q. (2012). The financial assimilation of immigrant families: Intergeneration and legal differences (Unpublished doctoral dissertation). Ohio State University, Columbus, OH. Wider Opportunities for Women, & University of Massachusetts Boston. (2011). National elder economic security initiative. Washington, DC: Wider Opportunities for Women. Yang, P. N. D., & Solheim, C. A. (2007). Financial management in Hmong immigrant families: Change and adaptation. Hmong Studies Journal, 8, 1–33.
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Financial Capability, Asset Ownership, and Later-Age Immigration: Evidence From a Sample of Low-Income Older Asian Immigrants YUNJU NAM School of Social Work, University at Buffalo, the State University of New York, Buffalo, New York, USA
EUN JEONG LEE Senior Community Service Employment Program, National Asian Pacific Center on Aging, Seattle, Washington, USA
JIN HUANG School of Social Work, Saint Louis University, St. Louis, Missouri, USA
JUNPYO KIM School of Social Work, University at Buffalo, the State University of New York, Buffalo, New York, USA
We examined financial capability and asset ownership among low-income older Asian immigrants with special attention given to later-age immigrants who came to the United States when they were 55 years old or older. Survey data collected from supported employment program participants ( N = 150) were used. The analyses demonstrated a low level of financial knowledge and asset ownership in the sample. The findings also indicated that later-age immigrants’ financial-management skills, knowledge of social programs, and asset ownership were significantly lower than those of young-age immigrants. These findings call for active interventions to enhance economic security among low-income older Asian immigrants. KEYWORDS wealth, immigration
economic
security,
elderly,
age
at
Received 26 September 2013; revised 6 May 2014; accepted 7 May 2014. Address correspondence to Yunju Nam, University at Buffalo, State University of New York, School of Social Work, 685 Baldy Hall, Buffalo, NY 14260-1050, USA. E-mail: [email protected] 114
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Assets and savings are essential for long-term economic security among older adults. Although Social Security benefits provide crucial economic resources for older adults in the United States, they do not fully satisfy older adults’ economic needs: The average Social Security income covers 61% of basic consumption needs among older women and 81% of these needs among older men (Wider Opportunities for Women & University of Massachusetts Boston, 2011). Older adults need to fill these economic gaps with savings and asset income (e.g., interests). However, only 54% of older adults have asset income (Purcell, 2009). Older immigrants also need more savings and assets because approximately 70% of them receive Social Security benefits, but almost all native older adults do so (Borjas, 2009). Among older immigrants, those who came to the United States at a later stage of life (later-age immigrants) are more vulnerable than others because they are less likely to have accumulated 10 years of work experience required for Social Security eligibility. We, however, know little about asset ownership and financial capability among older immigrants, especially later-age immigrants. According to a relatively new theoretical framework, financial capability is a key element for asset accumulation and ownership. This theory of financial capability argues that it is essential for individuals to have access to appropriate financial services to accumulate assets (Huang, Nam, & Sherraden, 2013; Sherraden, 2013), whereas the traditional approach focuses solely on financial literacy, or individual capability to make good financial decisions (Huston, 2010). Together, financial literacy and financial access contribute to an individual’s financial functioning in ways that lead to improved financial well-being (Sherraden, 2013). Previous studies illustrate that immigrants’ financial capability is limited because they are financially excluded. Immigrants’ knowledge of financial issues and the US financial system is low, especially among those with little education and limited English proficiency (Patraporn, Pfeiffer, & Ong, 2010). Immigrants face various barriers to US financial services. They have the same obstacles as disadvantaged native groups, such as the high costs of banking services (e.g., high account maintenance fees), but also have unique constraints, such as documentation requirements (e.g., Social Security number), communication difficulties in the absence of bilingual services, and discriminatory treatment (Osili & Paulson, 2008; Paulson, Singer, Newberger, & Smith, 2006). Immigrants from countries with fragile financial infrastructures may also distrust financial institutions (Paulson et al., 2006). Using data from nonelderly populations, several studies show that immigrants have lower levels of asset ownership than natives for all types of wealth, including home ownership (Borjas, 2002; Paulson et al., 2006); savings accounts, retirement savings, and stock ownership (Osili & Paulson, 2008); and net worth (Amuedo-Dorantes & Pozo, 2002; Cobb-Clark & Hildebrand, 2006). We have identified two existing studies that focused on older immigrants. Using a sample of older Mexican Americans, Burr, Mutchler, and Gerst (2011)
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found that home-ownership rates were higher among native Mexican older adults than among their immigrant counterparts. Sevak and Schmidt (2007) reported that older immigrants’ net worth and home-ownership rates were significantly lower than those of older natives. To our best knowledge, there is no quantitative study on whether and how financial capability and asset ownership differ by age at immigration. Not everyone argues for immigrants’ vulnerability, though. Based mostly on qualitative data, some researchers focus on the negative impacts of consumption-oriented culture in the United States and argue that immigrants, especially later-age immigrants, may have an advantage in accumulating assets. Wang (2012) showed that first-generation immigrants are less likely to borrow and to file for bankruptcy than second-generation and 1.5-generation (i.e., those who were born abroad but raised in the United States) immigrants. Yang and Solheim (2007) demonstrated that first-generation refugees maintain frugal lifestyles and save relatively large sums of money, despite their meager incomes. Members of the 1.5 generation are the most successful financially; they maintain a prudent consumption style while making judicious investment decisions via their knowledge of US financial systems. Conversely, the second generation spends more and rarely saves. These two studies suggest that acculturation into the US consumption-oriented culture may hamper asset accumulation among young-age immigrants and their children, and that later-age immigrants may be in a better position to accumulate assets than young-age immigrants. Building on the existing literature, we examine financial capability and asset ownership among low-income older Asian immigrants in the United States. This study makes the following contributions to the literature. First, we focus on older immigrants from Asia. Most previous studies paid attention mainly to younger immigrants. Older immigrants are at a different stage of life and have different needs and motivations for saving, when compared to their younger counterparts. A few studies cover asset ownership among older immigrants (Burr et al., 2011; Sevak & Schmidt, 2007), but none pays attention to those from Asia. Second, we investigate various indicators of asset ownership and financial capability, such as financial literacy and management. In this way, this study differs from the two existing studies on older immigrants that examine only homeownership and net worth (Burr et al., 2011; Sevak & Schmidt, 2007). In addition, we pay special attention to later-age immigrants who came to the United States at a later stage of their lives. Later-age immigrants are economically vulnerable because, unlike younger-age immigrants, they have a smaller chance of accumulating the 10 years of work experience and of being eligible for Social Security. However, it is unclear whether later-age immigrants are more likely to have accumulated assets than young-age immigrants. Those concerned about financial exclusion among immigrants expect later-age immigrants are more financially vulnerable than young-age immigrants because they have less chance to become acculturated to the US
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culture in general and to financial system in particular. Alternatively, those concerned about the US consumption-oriented culture predict better financial outcomes among later-age immigrants because they have less chance to be exposed to consumption-oriented culture and are more likely to maintain their frugal lifestyles (Wang, 2012; Yang & Solheim, 2007).
METHODS Data and Sample We use survey data collected from participants in a supported employment program: Senior Community Service Employment Program (SCSEP) operated by the National Asian Pacific Center on Aging (NAPCA). SCSEP is an employment and training program funded by the Department of Labor. SCSEP provides community service jobs for program participants and guides them into unsubsidized employment. SCSEP serves older adults (55 years old or older) whose income is less than 125% of the federal poverty threshold. Most participants in NAPCA’s SCSEP are Asian immigrants. NAPCA currently operate SCSEP in seven states. We conducted a survey at three locations: Los Angeles and Orange County in California and New York City in New York. The survey questionnaire was first developed in English and then translated into Chinese and Korean. Each translated questionnaire was back-translated into English. The design of the survey research was approved by the Social and Behavioral Science Institutional Review Board at the University at Buffalo (Study #4759). In March 2012, data was collected with the use of a self-administered group survey. Questionnaires were distributed to SCSEP participants at quarterly meetings that SCSEP mandated participants to attend. Accordingly, almost all SCSEP participants had the opportunity to participate in the study. Bilingual survey administrators attended the meetings and explained the study; they also informed participants of their right not to participate in the study. Of the 220 SCSEP participants who attended the meetings, 183 filled out the questionnaire, resulting in an 83% response rate. From these 183 cases, we deleted 23 from the analysis sample because they did not meet sample selection criteria (e.g., Hispanics); an additional 10 cases were deleted due to missing information in independent variables for the regression analyses. The final analysis sample size was 150.
Measures Dependent variables: Financial capability and asset ownership. The dependent variables were various measures of financial literacy, financial access, and asset ownership. These variables are identified as the main
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components of financial capability and long-term economic security in the theoretical framework of this study. We included three categories of financial literacy scales: financial knowledge, financial management, and social program knowledge. The financial knowledge scale was constructed with the number of correct answers to the four true-or-false questions on basic financial issues (e.g. “All banks give you the same rate of interest on your savings accounts.”). The potential range for this scale lies between 0 and 4, and Cronbach’s alpha was estimated to be 0.73. The financial management skill scale was generated from respondents’ own evaluations of the following two statements: “My family sets financial goals for our future” and “I keep track of my spending.” There were three answer categories: often true, sometimes true, and rarely true. This scale was created by averaging the answers to these two questions. The scale lies between 0 and 2, and Cronbach’s alpha was 0.55. The social program knowledge scale measured how well respondents understood the basic rules of Social Security and Medicare. Considering the crucial role of these two programs in older adults’ economic lives, understanding these programs is essential for long-term financial planning. This study created this scale by counting the number of right answers to five true-or-false questions (e.g., “Your Social Security benefit amount will be the same regardless of age of retirement.”). The scale ranged from 0 to 5, and Cronbach’s alpha was 0.70. Access to financial services is measured with three variables with which respondents evaluate mainstream financial institutions. The first two variables were the level of agreement with the following two statements with four answer categories (strongly agree, agree, disagree, and strongly disagree): “In general, I trust banks” and “It is easy to speak with bank staff members.” The third variable indicated how comfortable the respondent felt with opening a bank account with four answer categories (very uncomfortable to very comfortable). We created a series of variables for asset accumulation, asset ownership, and access to credit. First, the measure of asset accumulation is a dichotomous indicator of regular saving (1 for those who reported saving regularly and 0 otherwise). Second, we created five indicators of asset ownership: bank account (1 if the respondent or someone in the household had a checking or savings account); long-term savings (1 for those who reported owning one of the following liquid assets: savings account; money market account or certificate of deposit; retirement account; stocks or stock mutual funds; and corporate, municipal, government, or foreign bonds); home ownership (1 if the respondent or a household member owned a house); vehicle ownership (1 for those who owned a vehicle); and nonmainstream savings (1 for those with savings at home or with trusted friends or family members). Third, access to credit was measured with an indicator of major credit card ownership. Credit cards grant their owners easy and immediate access to credit by allowing them to carry a balance.
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Independent variable: Later-age immigrant indicator. The main independent variable was an indicator of later-age immigration. We divided the sample into later-age immigrants (i.e., those who immigrated to the United States at the age of 55 or older) and young-age immigrants. Among those who did not answer to the age-at-immigration question, a value was assigned if other information in the data provided a clear answer (e.g., a 69-year-old respondent with 21 years of work experience in the United States). We used an age cut-point of 55 years; those who come at this age or older likely have a hard time obtaining a mainstream job, because Americans begin to retire at age 55 (Blank & Ruggles, 1996). Control variables. This study includes demographics, human capital, household characteristics, visa status at entry into the United States, and survey location as control variables. We generated three demographics variables: the respondent’s age (younger than 65 years old; 65 years old and older; and missing value); gender (1 for female); and ethnicity (Chinese or Taiwanese; Korean; and other, e.g., Asian Indian, Filipino). Human capital variables included education (less than a high school diploma; a high school diploma; and a bachelor’s degree or higher), English proficiency (1 for those who reported speaking English somewhat or very well; 0 for others), and health status (1 for those who reported their health as excellent, very good, or good; 0 for fair or poor health). Household characteristics consisted of marital status and household size. Marital status had two categories (1 for currently married and 0 for other). Household size indicated the number of people in a respondent’s household (only one person; two people; and three or more). The visa status at entry variable had three categories: immigration visa; work, student, or business investment visa; and other (e.g., tourist visa). The survey location variable had three categories: Los Angeles, Orange County, and New York City.
Analytical Approaches We employed four different types of regression analyses, depending on the type of dependent variable: negative binomial regression for count variables (the financial knowledge and social program knowledge scales); ordinary least squares regression for continuous variables (the financial management scale); ordered-logit regressions for ordinal variables (the three access to financial services variables); and logit regressions for dichotomous variables (for regularly save, asset ownership, and credit card ownership). The main independent variable was the later-age immigrant indicator. The analysis model controlled for demographics, human capital, household characteristics, visa status at entry, and survey location, because they were expected to affect financial capability and asset ownership; these indicated one’s life stage, ability to obtain and understand new information, capability of adjusting to new environments, earning capability, and consumption
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needs (Beverly et al., 2008). Visa status at entry may indicate one’s chance of having been an undocumented immigrant, which likely affects one’s financial well-being. Those who enter with a visa for a short-term stay (e.g., a tourist visa) are more likely to become undocumented than those with a visa for a long-term stay (e.g., an immigration visa). The survey location captured differences in living environments (e.g., labor market conditions). Each regression excludes cases with a missing value in either dependent or independent variables from an analysis sample. We did not control for earnings and family income in our analyses. As SCSEP participants, all respondents were paid local minimum wage and reported working 20 hr a week. Therefore, earnings differed only by survey site. Only those with an income of 125% or less of the poverty threshold are eligible for SCSEP; variations in family income were small. In addition to the main analysis model, we ran supplemental analyses as robustness tests. First, we ran analyses using a later-age immigrant indicator with a different age cut-point (i.e., 50 years instead of 55 years). Second, we employed alternative statistical methods: Poisson regression for count variables, ordered probit for ordinal variables, and probit regressions for dichotomous variables. Third, we ran models with two alternative measures: (1) living arrangements (living alone, living only with spouse, or other) rather than household size; and (2) an ordinal variable (rather than the dichotomous one) to assess English proficiency (i.e., very well, somewhat well, not too well, or not at all). The results of most supplemental analyses were substantially identical to those of the main analyses, with a few exceptions. (The full results of the supplemental analyses are available from the authors.)
FINDINGS Sample Characteristics Table 1 compares later-age immigrants with young-age immigrants. Laterage immigrants were more likely to belong to the older group, less likely to be women, and less likely to be Korean than young-age immigrants. In terms of household characteristics, the former were significantly more likely to be married and to live in a large-size household (i.e., three or more members). All three measures of human capital (i.e., education, health, and English proficiency) were not significantly different between the two groups. In terms of visa type at entry, later-age immigrants were much more likely to hold an immigration visa than young-age immigrants.
Descriptive Statistics on Financial Capability and Asset Ownership Table 2 presents the outcome measures in the sample. The analysis results in Table 2 included only cases with valid information for each dependent variable; therefore, sample sizes differed across analyses, as shown in the
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TABLE 1 Sample Characteristics by Age at Immigration Young-Age Immigrants
Later-Age Immigrants
Total
53.93 35.96 10.11 62.92
32.79 62.30 4.92 49.18
45.33 46.67 8.00 57.33
32.58 46.07 21.35 47.19
31.51 27.87 40.98 78.69
32.00 38.67 29.33 60.00
34.83 41.57 23.60
6.56 45.90 47.54
23.33 43.33 33.33
17.98 44.94 37.08 70.79 40.45
13.11 44.26 42.62 68.85 42.62
16.00 44.67 39.33 70.00 41.33
66.29 16.85 16.85
83.61 3.28 13.11
73.33 11.33 15.33
44.94 22.47 32.58 89 (59.33)
50.82 8.20 40.98 61 (40.67)
47.33 16.67 36.00 150 (100)
Age (%)∗∗∗ < 65 years ≥ 65 years Missing Female (%)∗ Ethnicity (%)∗∗ Chinese or Taiwanese Korean Other Currently married (%)∗∗∗ Household size (%)∗∗∗ 1 member 2 members 3 or more Education (%) Less than high school High school diploma BA or higher Good health (%) English proficiency (%) Entry visa status (%)∗∗ Immigration Worker or student Other Survey location (%)∗ Los Angeles Orange County New York City Sample size (%) ∗
p < 0.1.
∗∗
p < 0.05.
∗∗∗
p < 0.01.
last column. Analysis results clearly demonstrated the precarious financial status of older Asian immigrants, especially of later-age immigrants. Typical respondents in the full sample provided approximately one correct answer to the four basic financial questions. The mean financial knowledge scale rating was 0.87 among later-age immigrants and 1.16 among young-age immigrants. The mean financial management scale score was 1.00 for the entire sample, 0.93 for later-age immigrants, and 1.05 for young-age immigrants. The social program knowledge scale demonstrated a statistically significant difference between later- and young-age immigrants: the mean was 1.43 among the former and 2.73 among the latter. In terms of access to financial services, a very high percentage (around 90%) agreed or strongly agreed that they trusted financial institutions. It is of interest that later-age immigrants were more likely to trust banks than young-age immigrants (96% vs. 88%). Approximately 90% agreed or strongly agreed that it was easy for them to talk with bank staff members, and nearly 80% felt very comfortable or somewhat comfortable to open a bank account.
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TABLE 2 Financial Capability and Asset Ownership by Age at Immigration
Financial literacy Financial knowledge (mean) Financial management (mean) Social program knowledge (mean)∗∗∗ Access to financial services In general, I trust banks (%) Strongly disagree Disagree Agree Strongly agree It is easy to speak with the bank (%) Strongly disagree Disagree Agree Strongly agree Comfort level with opening a bank account Very uncomfortable Somewhat uncomfortable Somewhat comfortable Very comfortable Asset accumulation and ownership Regularly save (%) Bank account ownership (%) Long-term savings ownership (%)∗ Vehicle ownership (%)∗∗∗ Home ownership (%)∗ Savings at home or with friends (%) Major credit card ownership (%) ∗
p < 0.1.
∗∗
p < 0.05.
∗∗∗
Young-Age Immigrants
Later-Age Immigrants
Full Sample
Sample Size
1.16 1.05 2.73
0.87 0.93 1.43
1.04 1.00 2.20
150 110 150
4.94 7.41 71.60 16.05
0.00 4.17 77.08 18.75
3.10 6.20 73.64 17.05
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1.45 7.25 72.46 18.84
0.00 9.52 80.95 9.52
0.90 8.11 75.68 15.32
111
7.14 15.71 18.57 58.57
10.00 10.00 25.00 55.00
8.18 13.64 20.91 57.27
110
17.98 83.15 41.57 44.94 25.88 0.00 41.57
9.84 73.77 26.23 19.67 14.04 1.64 37.70
14.67 79.33 35.33 34.67 21.13 0.67 40.00
150 150 150 150 142 150 150
p < 0.01.
However, saving and asset ownership rates are low. A very small percentage (15%) reported that they saved regularly. Although the majority had bank accounts, a substantial portion of the minority (21%) was unbanked, especially among later-age immigrants (26%). About one-third had long-term savings, and the difference was significant between later- and young-age immigrants (26% versus 42%). Similarly, vehicle- and home-ownership rates were low in the entire sample and lower among later-age immigrants as compared with young-age immigrants. Older Asian immigrants rarely had savings at home or with trusted friends or family members: Less than 1% of participants reported to have this type of savings. Access to credit was limited as indicated by rates of credit card ownership (40%).
Regression Analysis Results Table 3 summarizes the regression analysis results. We could not run a regression analysis on savings at home or with trusted friends, because this variable
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Financial Capability, Asset Ownership, and Later-Age Immigration TABLE 3 Regression Analysis Results for Age at Immigration Later-Age Immigrants Dependent Variables Financial knowledge scale Financial management scale Social program knowledge scale Trust banks Easy to talk with bank staff Comfort with opening an account Regularly save Bank account ownership Long-term savings ownership Vehicle ownership Home ownership Credit card ownership
Coef.
p-Value
Model Fit
Sample Size
−0.215 0.259 −0.326 0.170∗ −0.597 0.146∗∗∗
0.406 0.059 0.000
Pseudo R = .05 Adj. R2 = .09 Pseudo R2 = .11
150 110 150
1.051 0.538∗ 0.258 0.633 −0.389 0.535
0.051 0.684 0.467
Pseudo R2 = .12 Pseudo R2 = .08 Pseudo R2 = .07
129 111 110
−0.625 −1.071 −1.289 −1.340 −0.547 −0.721
0.332 0.081 0.014 0.011 0.332 0.115
Pseudo Pseudo Pseudo Pseudo Pseudo Pseudo
SE
0.644 0.614∗ 0.526∗∗ 0.530∗∗ 0.564 0.457
2
R2 R2 R2 R2 R2 R2
= = = = = =
.14 .26 .19 .24 .13 .12
125 150 150 150 142 150
Note. Coef. indicates coefficient and SE denotes standard error. Each regression controls for demographics (age, gender, and ethnicity), human capital (education, English proficiency, and health status), household characteristics (marital status and household size), visa status at entry, and survey location. ∗ p < 0.1. ∗∗ p < 0.05. ∗∗∗ p < 0.01.
did not have enough variation. As described in the Methods section, our analysis model controls for demographics, human capital, household characteristics, and other factors. Table 3 reports only main findings: the coefficient and standard error of the later-age immigrant indicator, the model fit of each analysis (adjusted R 2 or pseudo R 2 ) and the sample size for each analysis. Because regressions exclude cases with missing values for either independent or dependent variables, sample sizes differ across analyses. Adjusted R2 or pseudo R 2 statistics range from 0.05 to 0.26. Regression analyses produced expected results for control variables. College education had significantly positive associations with the financial knowledge scale, the social program knowledge scale, and one’s chance of owning a bank account and a credit card. English proficiency showed significantly positive associations with bank account and credit card ownership. (Full analysis results are available upon request.) Table 3 showed that later-age immigrants were less economically secure than young-age immigrants in general. The coefficients of the later-age immigrant indicator were significantly negative for financial management (p = 0.059) and for the social program knowledge scale (p = 0.000). Similarly, later-age immigrants are significantly less likely to have bank accounts (p = 0.081), long-term savings (p = 0.014), or a vehicle (p = 0.011). Later-age immigrants did not differ significantly at the 0.1 level of statistical significance from young-age immigrants in terms of their chance of saving regularly and of owning home or credit cards. Results regarding access to financial services were somewhat unexpected. The coefficient of later-age immigrant
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was significantly positive for the level of trust toward banks, which suggests that later-age immigrants showed a higher level of trust in mainstream financial institutions than young-age immigrants did. The two groups of older Asian immigrants were not significantly different in terms of the ease of talking with bank staff members and of the comfort level with opening a bank account. Results from most supplemental analyses were substantively identical to those reported here, with some exceptions. Results for the level of trust in banks and the ownership of bank accounts, long-term savings, and vehicles demonstrated that the alternative measure of the later-age immigrant indicator was not statistically significant when we used a cut-off point of age 50.
DISCUSSION This study examined long-term economic security among low-income older Asian immigrants by investigating financial capability and asset ownership. We also tested whether later-age immigrants were more financially secure than young-age immigrants. The financial exclusion perspective argues that later-age immigrants have less of a chance to be incorporated into the US financial system, and therefore have lower chances of accumulating assets than young-age immigrants. Those concerned about consumption-oriented culture claim that later-age immigrants have advantages because they are less likely to have acquired habits of overspending under the influence of US culture. Analysis results demonstrated precarious economic conditions among low-income older Asian immigrants as shown in low levels of financial knowledge and understanding of social programs, low percentage of regular savers, and low asset ownership rates for long-term savings, vehicles, and homes. These results are consistent with existing studies that show immigrants’ low levels of financial literacy and asset ownership (AmuedoDorantes & Pozo, 2002; Borjas, 2002; Cobb-Clark & Hildebrand, 2006; Paulson et al., 2006). Comparisons between later- and young-age immigrants suggested that the former were more precarious financially. Bivariate analyses indicates that the former have a significantly lower level of understanding of social programs and lower rates of owning long-term savings, a vehicle, or home. Regressions generate stronger associations between life-stage at immigration and financial conditions, suggesting that bivariate analyses could not reveal the true associations because of different age, ethnic, and other compositions between the two groups. Regression analyses indicated that life-stage at immigration has significant associations with financial management skills and bank account ownership, in addition to the dependent variables shown
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to be significant in bivariate analyses. Homeownership is an exception, though. Findings suggest that later-age immigrants are less knowledgeable about social programs, manage their finances less efficiently, and are less likely to own a bank account, long-term savings, and a vehicle than youngage immigrants. These findings support the argument of financial exclusion perspective. One surprising exception was that later-age immigrants had a significantly higher level of trust toward banks than young-age immigrants. This may be explained by the fact that immigrants with a greater chance of having direct experience with the US banking system (i.e., young-age immigrants) may have developed more negative views if they experienced excessive overdraft fees, rejected mortgage applications, or disrespectful treatment at a young age in financial institutions. This explanation is speculative and should be tested in future studies. This study does have limitations. First, the sample is not a probability sample, and thus may not be representative of low-income older Asian immigrants. The sample consisted of NAPCA’s SCSEP participants, who are likely different from older Asian immigrants who are not served by community organizations. Data were collected at three sites in areas with high proportions of Asian immigrants and with active Asian communities. Second, this study was unable to fully explore ethnic diversity in the sample, because the subgroup sizes of other ethnic groups (e.g., Filipino) were too small for separate analyses. The findings of this study have implications for future research. Researchers should pay attention to economic and other challenges among older Asian immigrants. Existing social and economic research has examined this population less than other racial and ethnic minorities, perhaps because of the model minority myth, which suggests Asian Americans are successful and problem-free (Sakamoto, Goyette, & Kim, 2009). The financial vulnerability revealed in this study calls for further investigation on older Asian Americans, especially those living in areas with small immigrant populations. Researchers also need an in-depth understanding of the financial incorporation process among immigrants, including facilitators and obstacles to financial success. This study’s findings have policy and practice implications. The economic vulnerability demonstrated here calls for active public policies and services that enhance long-term economic security among older Asian immigrants, especially later-age immigrants. A high proportion of older Asian immigrants without appropriate economic resources will likely impose negative effects on immigrant families and their communities and governments, as well as on older immigrants themselves. Accordingly, we should develop and adopt social policies and programs that assist older Asian immigrants, especially later-age Asian immigrants, in preparing for their postretirement economic needs as early as possible. The employment training program,
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such as SCSEP, may be an effective tool in promoting this population’s long-term economic security. As a federally-funded workforce program for low-income unemployed older adults, SCSEP provides subsidized work opportunities toward unsubsidized employment while helping program participants accumulate Social Security credits. Financial capability-building programs may enhance economic prospects of this population. On one hand, financial literacy education and planning services will improve financial knowledge and management skills, key components of asset-accumulation. Because of their financial vulnerability, older immigrants should be a target group for these services. On the other hand, governments and community organizations should work with financial institutions to expand older immigrants’ access to financial services. In developing financial capability building policies and programs, ethnic community-based organizations (CBOs) will play critical roles. Ethnic CBOs are knowledgeable about ethnic culture and can provide culturally-suitable programs and services in immigrants’ native languages. Ethnic CBOs would be efficient coordinators between older Asian immigrants and the US financial system because they understand both ethnic communities and mainstream financial institutions.
ACKNOWLEDGMENTS We are thankful to Christine Takada, Miriam Suen, Helen Jang, Norman Lee, Junghee Han, Xiao-Yu Yang, Kerry Situ, and Yong-Jin Ahn for their assistance with data collection. We are grateful to Ya-Ling Chen, Amanda Brower, and Sarah Nesbitt for their research assistance. This study was approved by the Social and Behavioral Science Institutional Review Board of the University at Buffalo (Study #4759).
FUNDING This study was supported in part by grants from the Les Brun Research Endowment Fund, Buffalo Center for Social Research, School of Social Work, University at Buffalo, and the Civic Engagement Research Dissemination Fellowship Program, University at Buffalo.
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