Unrest, layoffs, and productivity at a Bangladeshi sweater factory

Robert Akerlof, Anik Ashraf, Rocco Macchiavello and Atonu Rabbani

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Conflicts between management and workers are common in newly industrializing countries. Combining ethnographic, survey and administrative records from a Bangladeshi sweater factory, we study how workers responded when management laid off a quarter of the workers following a period of labor unrest. After the unrest, the factory experienced a substantial drop in productivity. Among surviving workers, those who likely had strong social connections – friends – among fired co-workers suffered relatively larger declines in productivity. Additional evidence on potential mechanism indicates a deliberate shading of effort to punish the factory’s management.

Keywords: layoffs; productivity; morale; relational contracts (search for similar items in EconPapers)
JEL-codes: J50 M50 O12 (search for similar items in EconPapers)
Date: 2026-07-17
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Published in Journal of the European Economic Association, 17, July, 2026. ISSN: 1542-4774

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