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The Selection and Causal Effects of Work Incentives on Labor Productivity: Evidence from a Two-Stage Randomized Controlled Trial in Malawi

Author

Listed:
  • Kim, Hyuncheol Bryant

    () (Cornell University)

  • Kim, Seonghoon

    () (Singapore Management University)

  • Kim, Thomas T.

    (Yonsei University)

Abstract

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.

Suggested Citation

  • Kim, Hyuncheol Bryant & Kim, Seonghoon & Kim, Thomas T., 2017. "The Selection and Causal Effects of Work Incentives on Labor Productivity: Evidence from a Two-Stage Randomized Controlled Trial in Malawi," IZA Discussion Papers 10644, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10644
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    Keywords

    career incentive; wage incentive; internship; self-selection; labor productivity;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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