Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector

We study promotion incentives in the public sector. In collaboration with Sierra Leone's Ministry of Health, we introduce exogenous variation in the meritocratic nature of promotions from health worker to supervisor positions and in health workers' perceptions of pay progression upon promotion. Ten months later, our findings reveal that meritocracy leads to a 22 percent increase in health workers' productivity. Greater perceived pay progression in a meritocratic system boosts productivity by 23 percent, whereas in a less meritocratic system, it decreases productivity by 27 percent. We show that this reduction is consistent with a negative morale effect.