Anatomy of a Contract Change

Rajshri Jayaraman, Debraj Ray and Francis de Vericourt

No 19849, NBER Working Papers from National Bureau of Economic Research, Inc

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 20–80%. 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 non-standard responses may be ephemeral, and should ideally be tracked over an extended period of time.

JEL-codes: J43 L14 O13 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-hrm, nep-lab and nep-lma
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Published as American Economic Review, vol. 106, no. 2, February 2016 (pp. 316-58)

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Journal Article: Anatomy of a Contract Change (2016)
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