Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico

Ingela Alger, Laura Juarez, Miriam Juarez and Josepa Miquel-Florensa
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Josepa Miquel-Florensa: UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse, TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: How do informal transfers affect work incentives? The question matters in developing countries, where labor markets are intertwined with transfer networks. The tax-and-subsidy component of transfers would dilute work incentives, but their prosocial element could encourage people to work harder. Such crosscurrents are hard to disentangle because participation in informal networks is likely endogenous. We tackle this problem with a lab-in-the-field experiment that uses a real-effort task. Our main finding is that participants do not reduce their effort in the presence of transfers. This suggests that the impact of informal transfers may extend beyond just the sharing of risk.

Date: 2020-10-01
Note: View the original document on HAL open archive server: https://hal.science/hal-03096129v1
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Published in Economic Development and Cultural Change, 2020, 69 (1), pp.107-171. ⟨10.1086/702858⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03096129

DOI: 10.1086/702858

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