Individual Incentives and Workers’ Contracts: Evidence from a Field Experiment

Ali Choudhary, Vasco Gabriel and Neil Rickman
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Neil Rickman: University of Surrey

No 320, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: We present evidence on the operation of incentive pay from a field experiment in Pakistan, looking at piece rates and pay based on rank achieved in a tournament. Importantly, some workers are in contracts ‘tying’ them to the employer for several picking seasons; others are ‘untied’ in the sense of being employed for only the current season. We find that incentive pay (of either type) improves productivity by 30% on average, but that there are important differences across the types of workers: in particular, tournament incentives are less effective amongst the tied workers. We suggest that our main results have implications for tournament theory and the design of incentive pay schemes, particularly to the extent that they may discourage some workers and, thus, reduce incentives.

JEL-codes: D23 J23 J33 M52 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2020-10
New Economics Papers: this item is included in nep-cta, nep-exp and nep-hrm
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Journal Article: Individual incentives and workers’ contracts: evidence from a field experiment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0320

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