Working Paper: NBER ID: w19849
Authors: Rajshri Jayaraman; Debraj Ray; Francis De Vericourt
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.
Keywords: labor contracts; incentives; behavioral economics; plantations
JEL Codes: J43; L14; O13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Contract change (O39) | Worker productivity (J29) |
| Increased supervision (G28) | Worker productivity (J29) |
| Behavioral responses (D91) | Worker productivity (J29) |
| Contract change (O39) | Short-term increase in productivity (O49) |
| Short-term increase in productivity (O49) | Long-term decline in productivity (O49) |