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Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico

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  • Ingela Alger
  • Laura Juarez
  • Miriam Juarez-Torres
  • Josepa Miquel-Florensa

Abstract

How do informal transfers affect work incentives? The question matters in developing countries, where labor markets are intertwined with transfer networks. The tax-and-subsidy component of transfers would dilute work incentives, but their prosocial element could encourage people to work harder. Such crosscurrents are hard to disentangle because participation in informal networks is likely endogenous. We tackle this problem with a lab-in-the-field experiment that uses a real-effort task. Our main finding is that participants do not reduce their effort in the presence of transfers. This suggests that the impact of informal transfers may extend beyond just the sharing of risk.

Suggested Citation

  • Ingela Alger & Laura Juarez & Miriam Juarez-Torres & Josepa Miquel-Florensa, 2020. "Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 107-171.
  • Handle: RePEc:ucp:ecdecc:doi:10.1086/702858
    DOI: 10.1086/702858
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    Cited by:

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    3. Alger, Ingela & Juarez, Laura & Juarez-Torres, Miriam & Miquel-Florensa, Josepa, 2020. "Do women contribute more effort than men to a real public good?," IAST Working Papers 20-103, Institute for Advanced Study in Toulouse (IAST).

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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