Anatomy of a Contract Change

Rajshri Jayaraman, Debraj Ray and Francis de Véricourt

American Economic Review, 2016, vol. 106, issue 2, 316-58

Abstract: We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20 to 80 percent. This response contradicts the standard model and several variants, is only partly explicable by greater supervision, and appears to be "behavioral." But in subsequent months, the increase is comprehensively reversed. Though not an unequivocal indictment of "behavioral" models, these findings suggest that nonstandard responses may be ephemeral, and should ideally be tracked over an extended period of time. (JEL D82, D86, J33, J41, J43, O13, Q12)

JEL-codes: D82 D86 J33 J41 J43 O13 Q12 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20141122
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Citations: View citations in EconPapers (26)

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Working Paper: Anatomy of a Contract Change (2014)
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