American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Financial Incentives as Signals: Experimental Evidence from the Recruitment of Village Promoters in Uganda
American Economic Journal: Applied Economics
vol. 11,
no. 1, January 2019
(pp. 277–317)
Abstract
I study the role of financial incentives as signals of job characteristics when these are unknown to potential applicants. To this end, I create experimental variation in expected earnings and use that to estimate the effect of financial incentives on candidates' perception of a brand-new health-promoter position in Uganda and on the resulting size and composition of the applicant pool. I find that more lucrative positions are perceived as entailing a lower positive externality for the community and discourage agents with strong pro-social preferences from applying. While higher financial incentives attract more applicants and increase the probability of filling a vacancy, the signal they convey reduces the ability to recruit the most socially motivated agents, who are found to stay longer on the job and to perform better.Citation
Deserranno, Erika. 2019. "Financial Incentives as Signals: Experimental Evidence from the Recruitment of Village Promoters in Uganda." American Economic Journal: Applied Economics, 11 (1): 277–317. DOI: 10.1257/app.20170670Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- I18 Health: Government Policy; Regulation; Public Health
- J31 Wage Level and Structure; Wage Differentials
- J63 Labor Turnover; Vacancies; Layoffs
- M52 Personnel Economics: Compensation and Compensation Methods and Their Effects
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
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