Work

Anatomy of a Contract Change

Year: 2016

Type: article

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)

Source: American Economic Review

DOI: 10.1257/aer.20141122

Authors: Rajshri Jayaraman, Debraj Ray, Francis de Véricourt

Institutions: European School of Management and Technology, University of Warwick, New York University

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: bronze

OpenAlex ID: W2293672554

FWCI: 7.327

Cites: 43

Cited by: 30

Related to: 10