The selection and causal effects of work incentives on labor productivity: Evidence from a two stage randomized controlled trial in Malawi

• Main Authors: KIM, Hyuncheol Bryant, KIM, Seonghoon, KIM, Thomas T.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: Career incentive; wage incentive; internship; self-selection; labor productivity; Labor Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/2020; https://ink.library.smu.edu.sg/context/soe_research/article/3019/viewcontent/SSRN_id2944546.pdf
• Institution: Singapore Management University

Incentives are essential to promote labor productivity. We implemented a two-stage field experiment to measure effects of career and wage incentives on productivity through self-selection and causal effect channels. First, workers were hired with either career or wage incentives. After employment, a random half of workers with career incentives received wage incentives and a random half of workers with wage incentives received career incentives. We find that career incentives attract higher-performing workers than wage incentives but do not increase productivity for existing workers. Instead, wage incentives increase productivity for existing workers. Observable characteristics are limited in explaining the selection effect.