Research

Abstract: Most labor in low- and middle-income countries is traded through short-term, informal contracts. We explore whether this feature of the labor market leads employers to under-train workers in general human capital, because most of the returns from training are not captured by the training employer. We conduct two field experiments with agricultural employers in Burundi who can train casual laborers in improved, labor-intensive, agricultural techniques. In the first experiment, we offer employers in some local labor markets (villages) incentives to train workers. After training, employers who trained workers find it harder to retain them, with many of the trained workers subsequently working for other employers in the local labor market. The spillovers onto the other employers (who did not train) are large, leading to improved farm outcomes and higher profits. In the second experiment, we randomize employers into a condition that increases the likelihood that the worker will return to work for the employer in the future. Employers receiving this guarantee are 50 percentage points more likely to train the worker. These findings suggest that the wedge between private and social returns to training meaningfully impedes on-the-job-learning, diminishing worker productivity and output.

Abstract: The modal firm in low- and middle-income countries has no employees that are not family members. While this is often attributed to informational or contractual frictions, an alternate view is that pressure to offer financial assistance to extended family in the form of employment may distort employers' hiring decisions. I design three field experiments - conducted with both urban firms and agricultural employers in Zambia - to test whether pressure impacts firm hiring, and examine its productivity implications. In the first experiment, urban firms are offered the chance to receive a 3-month subsidy for hiring a full-time permanent employee. A subset of firms is then randomized to receive plausible deniability in their hiring decision: receiving a poster that suggests the firm may not have been eligible for the subsidy if it hired a relative. This increases the probability of choosing to hire a non-related employee, rather than a related one, by 11 percentage points (20 percent). In the second experiment I show it is socially very costly for employers to hire a non-relative: when they have plausible deniability, the subsidy required to get a firm to choose a non-relative rather than a relative falls substantially - equivalent to 4 percent of total monthly profits. This effect is concentrated among firm owners that report higher redistributive pressure at baseline. In the third experiment I show that in a common agricultural job where productivity is measurable - maize shelling - the same worker is more likely to shirk when working for a related employer, leading relatives to be 7 percent less productive than non-relatives. Consistent with higher moral hazard problems with relatives, employers across samples report that firing a relative would lead to social penalties. Similarly, in the urban sample, treatment effects are higher among firms that report more difficulty verifying worker effort at baseline. These findings suggest that social pressure to hire relatives may distort the composition of employment as well as productivity in developing countries.

Abstract: Individuals may fail to recall and use information they already know when making decisions. We empirically investigate whether such ``retrieval failures'' distort consumption smoothing behavior among Zambian farmers, who derive their income from one annual harvest and then spend it down over the course of the year. We document that individuals underestimate upcoming spending by 50%, creating scope for under-saving. In order to improve recall, we randomize an intervention that prompts individuals to think through their future expenses associatively in categories-without providing any external information or guidance. Treated individuals increase ``remembered'' expenses by 42%; as predicted by the memory literature, effects are concentrated among small, irregular, and stochastic items. Immediate spending drops and, two months after the intervention, treated households hold 15% higher savings. They subsequently enter the ``hungry season''-the final months of the year when consumption typically declines sharply-with one additional month of savings, leading to a flatter spending profile over the year. Households use the increased savings to self-finance additional farm investment, resulting in a 9% increase in the next year's crop revenue. We replicate the intervention's impact on beliefs among low-income Americans, suggesting that retrieval failures generalize across settings and populations.

Do workers not train co-workers to limit competition for their job? We conduct multiple field experiments to show the existence of knowledge hoarding behavior and document the aggregate and distributional consequences of hoarding knowledge on workers' earnings and employers' output.

Earned wage access offers low-income workers earlier access to their earnings. Is access to earnings on demand beneficial or harmful to workers? We partner with the largest provider of earned wage access in Europe, and investigate this question using administrative data and survey experiments.