Wage Differentials and Workers’ Effort: Experimental Evidence from Uganda

John Sseruyange, Erwin Bulte

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We organize a real-effort field experiment with varying piece rates to assess the impact of wages and social comparisons on productivity. In addition to analyzing how piece rates and social comparisons affect productivity during the ‘paid stage’ of the experiment, we also consider how they affect effort supply during a voluntary and unpaid follow-up task. Our main results are that effort supply is relatively unresponsive to variation in own earnings, but responds strongly to pay inequality. While we obtain weak support for the hypothesis that positive social comparisons invite extra effort during paid stages of the experiment, our most important finding is that social comparisons matter for voluntary tasks when shirking is cheap. Specifically, positive social comparisons positively affect productivity during unpaid tasks, and negative comparisons have the opposite impact.

Original languageEnglish
JournalOxford Bulletin of Economics and Statistics
DOIs
Publication statusE-pub ahead of print - 19 Dec 2019

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wage difference
Wages
Uganda
worker
Productivity
evidence
productivity
experiment
supply
Field Experiment
Experiment
Evidence
Social comparison
Workers
Wage differentials
wage

Cite this

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Wage Differentials and Workers’ Effort: Experimental Evidence from Uganda. / Sseruyange, John; Bulte, Erwin.

In: Oxford Bulletin of Economics and Statistics, 19.12.2019.

Research output: Contribution to journalArticleAcademicpeer-review

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AB - We organize a real-effort field experiment with varying piece rates to assess the impact of wages and social comparisons on productivity. In addition to analyzing how piece rates and social comparisons affect productivity during the ‘paid stage’ of the experiment, we also consider how they affect effort supply during a voluntary and unpaid follow-up task. Our main results are that effort supply is relatively unresponsive to variation in own earnings, but responds strongly to pay inequality. While we obtain weak support for the hypothesis that positive social comparisons invite extra effort during paid stages of the experiment, our most important finding is that social comparisons matter for voluntary tasks when shirking is cheap. Specifically, positive social comparisons positively affect productivity during unpaid tasks, and negative comparisons have the opposite impact.

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