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Individual incentives and workers’ contracts: evidence from a field experiment

Author

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  • M Ali Choudhary
  • Vasco J Gabriel
  • Neil Rickman

Abstract

We present evidence on the operation of incentive pay from a field experiment in Pakistan, looking at piece rates and pay based on rank achieved in a tournament. Importantly, some workers are in contracts ‘tying’ them to the employer for several picking seasons; others are ‘untied’, in the sense of being employed for only the current season. We find that incentive pay (of either type) improves productivity by 30%, on average, but that there are important differences across the types of workers: in particular, tournament incentives are less effective amongst the tied workers. We suggest that our main results have implications for tournament theory and the design of incentive pay schemes, particularly with regard to the fact that they may discourage some workers and, thus, reduce incentives.

Suggested Citation

  • M Ali Choudhary & Vasco J Gabriel & Neil Rickman, 2021. "Individual incentives and workers’ contracts: evidence from a field experiment," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 248-272.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:1:p:248-272.
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    File URL: http://hdl.handle.net/10.1093/oep/gpz061
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    Cited by:

    1. Theresa Chaudhry & Zunia Tirmazee & Umair Ayaz, 2023. "Experimental Evidence on Group-based Attendance Bonuses in Team Production," Journal of South Asian Development, , vol. 18(1), pages 90-110, April.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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