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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

Listed author(s):
  • Kim, Hyuncheol Bryant

    ()

    (Cornell University)

  • Kim, Seonghoon

    ()

    (Singapore Management University)

  • Kim, Thomas T.

    (Yonsei 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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10644.

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Length: 61 pages
Date of creation: Mar 2017
Handle: RePEc:iza:izadps:dp10644
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