Anatomy of a contract change

Rajshri Jayaraman, Debraj Ray, Francis De Véricourt

    Research output: Contribution to journalArticlepeer-review

    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.

    Original languageEnglish (US)
    Pages (from-to)316-358
    Number of pages43
    JournalAmerican Economic Review
    Volume106
    Issue number2
    DOIs
    StatePublished - Feb 2016

    ASJC Scopus subject areas

    • Economics and Econometrics

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