Working Paper: CEPR ID: DP14213
Authors: Francesco Amodio; Miguel Martinez-Carrasco
Abstract: This paper studies how asymmetric information over inputs affects workers’ response to incentives and self-selection at the workplace. Using daily records from a Peruvian egg production plant, we exploit a sudden change in the worker salary structure and find that workers’ effort, firm profits, and worker participation change differentially along the two margins of input quality and worker type. Firm profits increase differentially from high productivity workers, but absenteeism and quits of these workers also differentially increase. Evidence shows that information asymmetries over inputs between workers and managers shape the response to incentives and self-selection at the workplace.
Keywords: asymmetric information; input heterogeneity; incentives; self-selection
JEL Codes: D22; D24; J24; J33; M11; M52; M54; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| asymmetric information over inputs and worker heterogeneity (D82) | response to incentives and self-selection (D91) |
| change in incentive structure (D49) | feeding effort of workers handling higher quality inputs (J24) |
| change in incentive structure (D49) | absenteeism and quits of high productivity workers (J22) |
| high productivity workers (J24) | firm profits (L21) |
| high productivity workers (J24) | absenteeism and turnover rates (J22) |
| change in incentive structure (D49) | differential responses along the margins of input quality and worker type (L15) |