Abstract

We study how career and wage incentives affect labor productivity through self-selection and incentive effect channels using a two-stage field experiment in Malawi. First, recent secondary school graduates were hired with either career or wage incentives. After employment, half of the workers with career incentives randomly received wage incentives, and half of the workers with wage incentives randomly received career incentives. Career incentives attract higher-performing workers than wage incentives do, but they do not increase productivity conditional on selection. Wage incentives increase productivity for those recruited through career incentives. Observable characteristics are limited in explaining selection effects of entry-level workers.

I. Introduction

WORK incentives are essential tools for improving labor productivity. Firms try to recruit productive workers and motivate existing employees to exert more effort through work incentives. Career incentives (tenure and promotion) and financial incentives (higher wage, cash bonus, and employee stock option) are common examples of work incentives. There are two channels through which work incentives can affect labor productivity: selection and incentive effects.1 A better understanding of how different incentives affect labor productivity would enable firms to design optimal hiring and compensation strategies that maximize labor productivity and reduce the need for costly screening processes.

We provide experimental evidence on how career and wage incentives affect labor productivity through self-selection and incentive effect channels. We conduct a two-stage, randomized, controlled trial to separately isolate the selection and incentive effects of these incentives in collaboration with Africa Future Foundation (AFF), an international nongovernmental organization (NGO), in the context of a recruitment drive for entry-level enumerators for a population census survey in rural Malawi.

The career incentives we study consist of a future job prospect and a recommendation letter, typical benefits of an internship position.2 The wage incentives in our study are composed of a lump-sum salary and performance-related bonus payment. Firms might expect that career incentives attract workers more forward looking or risk loving than others because an internship position implies taking the risk of not being employed at the end of the internship. Firms might also expect that wage incentives attract workers more extrinsically motivated by monetary compensation.

Our research setting, the recruitment of entry-level enumerators in Malawi, is suitable to study the role of work incentives in productivity because we are able to measure high-frequency, individual-level labor productivity. The nature of an enumerator job is multidimensional because enumerators are expected to conduct interviews both quickly and accurately. Thus, we measure job performance by the number of surveys conducted per day (survey quantity) and the proportion of errors or mistakes made in a survey (survey quality). In addition, our setting has advantages to study the role of work incentives, especially in worker self-selection. Worker screening in developing countries is difficult because observable information on worker skills such as certification, accreditation, and past work history is limited. It is even more challenging to observe the productivity of entry-level workers due to no or short work history.

To hire enumerators, AFF approached 440 randomly selected recent high school graduates in its project areas. As shown in figure 1, in the first stage, study subjects were randomly assigned to one of the two groups: (a) those who received a job offer with career incentives (the Internship group) and (b) those who received a job offer with wage incentives (the Wage group). Those assigned to the Internship group received an internship opportunity that comes with a potential long-term employment opportunity at AFF as a regular employee and a recommendation letter specifying their job performance.3 A one-time temporary work opportunity with a lump-sum wage and a bonus payment based on job performance was offered to those assigned to the Wage group.

Figure 1.

Experimental Design

Notes: N indicates the number of participants in each stage; n indicates the number of surveys conducted by census enumerators.

Figure 1.

Experimental Design

Notes: N indicates the number of participants in each stage; n indicates the number of surveys conducted by census enumerators.

Individuals who accepted the job opportunity in the first stage proceeded to enumerator training and the second-stage randomization. After completing the training, a randomly selected half of the job takers in the Internship group also received the same wage incentives as the Wage group without prior notice. In the same manner, a randomly selected half of the job takers in the Wage group also received the same career incentives as the Internship group without prior notice. As a result, this research design creates four subgroups: group 1 (G1) and group 2 (G2) became enumerators through career incentives, but only G2 received additional wage incentives. Similarly, group 3 (G3) and group 4 (G4) became enumerators through wage incentives, but only G3 received additional career incentives.

We isolate the selection effect on labor productivity by comparing G2 and G3, both of which have identical incentives (both career and wage incentives) during the work period. However, the channels through which they were attracted to the job are different.4 Our identifying assumption of the selection effect is that sequences in which first-stage and second-stage incentives are presented to G2 and G3 participants are independent of the combined value of the career and wage incentives. This assumption is required both in the conceptual framework (see appendix A.2) and the empirical analysis (see section IVC). We discuss the reliability of this assumption with further details in section IVC.

In addition, we estimate the incentive effects of wage incentives (henceforth, wage incentive effects) on job performance among the job takers in the Internship group by comparing G1 and G2. Both groups became enumerators through the career incentives, but only G2 received additional wage incentives. Hence, any difference in performance between G1 and G2 can be interpreted as wage incentive effects among the job takers in the Internship group. Similarly, we estimate the incentive effects of career incentives (henceforth, career incentive effects) on job performance among the job takers in the Wage group by comparing G3 and G4. Any difference in performance between G3 and G4 can be interpreted as career incentive effects among the job takers in the Wage group.

Of 440 randomly selected recent male high school graduates whom AFF approached for the baseline survey of this study without prior notice of job opportunity, 362 (82.3%) participated in the baseline survey.5 Of 176 study participants assigned to the Wage group, 74 (42.0%) accepted a job offer by joining the training session. Of 186 study participants assigned to the Internship group, 74 (39.8%) took up the job offer. Of 148 trainees, 11 dropped out from the training. As a result, 137 enumerators worked in the field for an average of 18 days interviewing 21,561 households.6

We reach four main conclusions using data on labor productivity measured by survey quality and survey quantity. First, we find that career incentives, compared to wage incentives, attract workers with higher labor productivity through the self-selection mechanism. Second, we find that the incentive effects of career incentives among those recruited by wage incentives are limited in improving labor productivity. Third, we find that wage incentives causally increase labor productivity among those recruited through career incentives. As a result, overall job performance is highest among G2 enumerators who were hired through the career incentive channel and also received wage incentives. Finally, we find that observable individual characteristics are limited in explaining the selection effect of entry-level workers, suggesting a limitation of screening based on observable characteristics and a need for a self-selection mechanism that can attract productive workers with desirable (unobserved) characteristics.

Our primary contribution to the literature is that we study career and wage incentives, the most common types of work incentives, jointly in the same setting and provide real-world evidence on how these incentives affect labor productivity by identifying the selection and incentive effect channels through two-stage randomization.

Previous studies estimating the selection and incentive effects separately focus only on financial incentives (Lazear, 2000; Gagliarducci & Nannicini, 2013; Guiteras & Jack, 2018). Moreover, their findings on the relative importance of selection and incentive effects are mixed. For example, Lazear (2000) isolates worker selection and incentive effects of pay-for-performance using nonexperimental panel data on job performance from a large manufacturing factory in the United States. He shows evidence that the change to piece rate pay increases labor productivity by 44%, with half of it coming from the selection effect and the other half from the incentive effect. Gagliarducci and Nannicini (2013) also identify the selection and incentive effects of wage incentives on the performance of politicians by exploiting policies that discontinuously change their salaries and limit political terms. They find that a higher wage attracts more educated candidates and leads to improved efficiency of public finance through the selection channel. By contrast, Guiteras and Jack (2018) find evidence from bean-sorting workers in rural Malawi that a higher piece rate increases productivity only through the incentive effect channel, not through the worker selection channel. Our results are consistent with Lazear's (2000) findings that both selection and incentive effects are important.

Several studies have focused on the selection effects of work incentives. Dohmen and Falk (2011) show that sorting of workers largely explains higher labor productivity under a variable-payment scheme compared to a fixed-payment scheme in a laboratory experiment setting. Dal Bó, Finan, and Rossi (2013) show that a higher wage attracts more qualified applicants without the cost of losing workers with strong public service motivation in a recruitment drive for Mexico's public sector workers. Ashraf, Bandiera, and Lee (2020) similarly show that salient career incentives attract more productive workers without discouraging those with prosocial preferences from applying for a job in a recruitment drive for community health workers in Zambia. Deserranno (2018), however, finds that the expectation of a higher salary for a newly created health-promoter position discourages job applications from socially motivated candidates in Uganda. While the previous literature estimated selection effects of either financial incentives or career incentives, we estimate selection effects of career incentives evaluated against wage incentives.

In addition, our study is related to another strand of the literature on incentive effects on job performance. To the best of our knowledge, the previous literature mainly focuses on financial incentives, (Gneezy & List, 2006; Shearer, 2004; Glewwe, Ilias, & Kremer, 2010; Duflo, Hanna, & Ryan, 2012; Fryer, 2013; Ashraf, Bandiera, & Jack, 2014). For example, Gneezy and List (2006) empirically test the gift exchange theory (Akerlof, 1984) and show that workers exert more effort when they receive a financial incentive (“gift”) from their employers. Shearer (2004) presents experimental evidence from Canadian tree planters that piece rates induce more effort than do fixed wages. By contrast, ours is the first of its kind to estimate career incentive effects.

Lastly, our study is related to the literature on internships. Most studies on internships have been descriptive (Brooks et al., 1995; D'Abate, Youndt, & Wenzel, 2009; Liu et al., 2014). A rare exception is Nunley et al. (2016), which sends out fake résumés with randomly changed characteristics of applicants. They find that a résumé with internship experience receives 14% more callbacks from potential employers. However, a major limitation of the résumé audit study is lack of job performance data. Since career incentives in this study closely follow the structure of an (unpaid) internship program in the real world, this study offers experimental evidence on the effects of an internship on worker selection and job performance.

The remainder of the paper is structured as follows. Section II outlines the research context and design. Section III describes the data and reports sample statistics. Section IV presents the main results on labor productivity and discusses the findings. Section V concludes.

II. Research Context and Design

A. Research Context

Malawi is one of the least developed countries in the world with GDP per capita in 2015 of US$382 (World Bank, 2016). Among males 20 to 29 years old, 19.6% completed secondary school education, according to the 2010 Malawi Demographic and Health Survey. Employment in the official sector is 11%, and the median monthly income is US$28.8 (13,420 MWK) (National Statistical Office of Malawi, 2014).7

AFF conducted a district-wide population census of Chimutu, a rural district located outside the capital city of Malawi, in January 2015. The district consists of 52 catchment areas with about 94,000 people (around 24,000 households). AFF planned to complete a census within a month by hiring more than 130 enumerators.

The enumerator position could be an attractive starting job for entry-level young workers because it offers a competitive salary and confers career-advancing incentives. For example, AFF's many regular staff members were initially recruited as enumerators. The role of the census enumerators was to interview household heads to collect basic demographic, socioeconomic, and health information. During the census period, enumerators stayed at a house in the assigned catchment area that AFF rented. Since enumerators interviewed many residents in remote villages to collect a variety of personal and complex information, the job required both cognitive and interpersonal skills, as well as physical endurance.

Study participants to whom AFF offered the enumerator job were drawn from the sample of individuals who participated in the 2011 secondary school student survey in four districts in Malawi, including Chimutu. This survey was a baseline survey for AFF's previous research program that randomly provided HIV/AIDS education, male circumcision, and financial support for female education in their catchment areas.8 Of the 536 males who participated in the 2011 secondary school survey and graduated from secondary school in July 2014, AFF randomly selected 440 as target study participants. The 362 study participants participated in the survey (i.e., the baseline survey of this study) without prior notice of a potential job offer. This sample recruitment approach allowed AFF to hire workers familiar with the census area. AFF considered only males due to security concerns in the field. In addition, it required secondary school graduation as proof of minimum cognitive skill requirements.

Outside options for the enumerator job are other formal sector jobs, household farming, and repeating secondary school. For instance, at the time of the baseline survey, 4.7% of our study participants were working for pay in formal sectors, 4.3% were working for their family business (mainly farming), and 15.8% were attending vocational schools or colleges. About 60% were actively searching for jobs.

Our sample recruitment strategy has two advantages. First, we observe the population of a young cohort whose members are potentially interested in a job opportunity in the local labor market, contrary to existing studies that observe only job applicants. This feature allows our findings to have greater external validity by addressing the concern that individual characteristics of job applicants may be systematically different from those of nonapplicants. For example, applicants could be more likely to possess the necessary skills, have better access to the information (at least for a job vacancy), or be less likely to be happy with their existing positions if they are currently working for another employer. Hence, the estimation of selection effects of any work incentives is inherently local to job applicants. Second, approaching those who just graduated from secondary school is relevant to an internship, which mainly targets young and entry-level workers.

B. Experimental Design

In this section, we explain the details of the experiment. The discussion of a conceptual framework that motivates our experimental design and provides guidelines for the empirical analysis is in appendix A.2.

Baseline survey and first-stage randomization.

We describe the research stages in chronological order, as shown in table 1. As stated in section I, AFF invited 440 males who met the eligibility criteria (target study participants) for the baseline survey (row A), and 362 (82.3%) participated in the baseline survey (row B).9 In addition, AFF invited study participants soon after the census was completed between April and June 2015 to measure time and risk preferences and rational decision-making ability.10

Table 1.
Experiment Stages
Number of Individuals
Stage of ExperimentG1: Career Incentives OnlyG2: Career Incentives and Additional Wage IncentivesG3: Wage Incentives and Additional Career IncentivesG4: Wage Incentives Onlyp-ValueTotal
Target study subjects December 2011 220 220 — 440 
Study participants (baseline survey participants) December 2014 186 (84.1%) 176 (80.0%) .265 362 
Trainees January 2015 74 (39.8%) 74 (42.0%) .663 148 
Trainees who failed training  11 — 11 
Enumerators January–February 2015 63 (33.9%) 74 (42.0%) — 137 
   33 30 35 39   
Number of surveys  4,448 5,298 5,836 5,939 — 21,521 
Number of Individuals
Stage of ExperimentG1: Career Incentives OnlyG2: Career Incentives and Additional Wage IncentivesG3: Wage Incentives and Additional Career IncentivesG4: Wage Incentives Onlyp-ValueTotal
Target study subjects December 2011 220 220 — 440 
Study participants (baseline survey participants) December 2014 186 (84.1%) 176 (80.0%) .265 362 
Trainees January 2015 74 (39.8%) 74 (42.0%) .663 148 
Trainees who failed training  11 — 11 
Enumerators January–February 2015 63 (33.9%) 74 (42.0%) — 137 
   33 30 35 39   
Number of surveys  4,448 5,298 5,836 5,939 — 21,521 

The proportions of individuals remaining over experiment stages are in parentheses. The number of participants in the stage B is divided by the number of participants in the stage A, and the number of participants in the stages C and E are divided by the number of participants in the stage B.

To minimize unexpected interaction among workers with different incentives, first-stage randomization was performed in advance, and the baseline survey and training were also conducted separately for the Internship and Wage groups. Study participants were given a job offer with detailed information on an enumerator position at the end of the baseline survey. It is noteworthy that a job offer was valid conditional on successful completion of the training. We refer to a conditional job offer simply as a job offer henceforth. Study participants were not aware of the other type of incentives when they received an offer.

Of 220 target study participants assigned to the Wage group, 176 (80.0%) showed up for the baseline survey (row B) and were given a short-term (verbal) job offer, each with a fixed salary of 10,000 MWK (US$21.50) for up to thirty days and performance pay of 500 MWK (US$1.10) for every extra 8 households after the first 160 households.11 Of 220 target study participants assigned to the Internship group, 186 (84.5%) showed up for the baseline survey (row B) and were given a (verbal) job offer with career incentives, which consist of a recommendation letter and the prospect of working at AFF as a regular staff member.

The base wage of 10,000 MWK was competitive for young workers who had just graduated from secondary schools because the median monthly salary of secondary school graduates in 2013 was 12,000 MWK (US$25.80), according to the Malawi Labor Force Survey (NSO, 2014).12 AFF notified the Internship group that there would be a chance of a long-term contract, without specifying the precise probability, depending on job performance during the contract period and AFF's job vacancies. Working as an intern without knowing the exact probability of hiring is close to the general internship setting. Finally, one-time transportation support, on average about 1,500 MWK (US$3.20), was given to both Wage and Internship groups depending on the distance from the worker's home and the dispatched village.

Training.

Those who took the job offer were required to participate in a one-week training program in January 2015, designed to equip trainees with the necessary skills and knowledge for the census work. The training outcomes were measured by a quiz score and the proportion of erroneous entries in a practice survey. To prevent interaction between participants with different incentives, the Internship group (the first week) and Wage group (the second week) joined the training sessions separately, but the instructors and the training materials were identical.

Out of the 186 study participants in the Internship group, 74 (39.8%) participated in the training session, as did 74 out of 176 (42%) study participants in the Wage group (row C). The job take-up rates (training participation rates) between the Internship and the Wage groups were not statistically different. However, 11 trainees from the Internship group were not hired because of low training performance, while no one failed from the Wage group (Row D). In total, 137 enumerators were finally hired, 63 of whom were from the Internship group and 74 from the Wage group (row E). As a result, we do not observe the job performance of 11 trainees from the Internship group who failed the training requirement.13

Second-stage randomization.

This was conducted during the training, and the randomization results were announced after the training completion but before the dispatch to the catchment area. The wage incentives were given to a randomly selected half of the Internship group and the career incentives to a randomly selected half of the Wage group. The second-stage randomization was announced publicly. Therefore, both G1 and G2 enumerators learned about the additional wage incentives, and both G3 and G4 enumerators learned about the additional career incentives. AFF staff explained to enumerators that they would distribute additional incentives in a random manner due to budget constraints. No enumerators refused to accept the additional incentives, which implies that the composition of worker characteristics between G1 and G2 and between G3 and G4 remains the same.

Right after the second-stage randomization, AFF supervisors and enumerators had a one-on-one session to explain the details of the contract, and the enumerators signed the employment contract, as shown in figures A.1, A.2, and A.3.14 To illustrate, the employment contract of G1 explicitly states that enumerators will not be given any financial compensation and will be provided with a recommendation letter and a potential job opportunity based on their performance.

Census and post-enumeration survey.

Enumerators were dispatched to 52 catchment areas in January 2015. They were randomly assigned to catchment areas stratified by population and land size, and worked independently. Enumerators in the same catchment area have the same incentives to prevent unexpected peer effects. In addition, enumerators were not assigned to areas from which they originally came, as locality could affect their performance. The census survey took about 25 minutes on average to interview a household head. Enumerators were expected to survey at least eight households per day. In total, enumerators surveyed 21,561 households during the contract period.

AFF supervisor teams, which consisted of two supervisors per team, visited enumerators to monitor and guide enumeration work on randomly selected dates without prior notice. Supervisors are AFF's regular staff members, each with at least three years of experience conducting field surveys. AFF randomly assigned five supervisor teams to 52 catchment areas for their visits. Most enumerators met a supervisor team at least once during the census period; 37% of the enumerators met supervisors twice, and the remaining 60% met supervisors once. Enumerators were aware of supervisor visits but did not know the exact date. Supervisors joined each enumerator for interviews of about three households, addressed common errors, and provided overall comments at the end of the visit.

Shortly after the completion of the census, AFF conducted a post-enumeration survey (PES) to correct errors found in the original census interview, find omitted households, and measure subjective performance evaluation (SPE) by revisiting all households in Chimutu. AFF announced a PES plan to evaluate the performance before the field dispatch to prevent enumerators from outright cheating or fabricating census interview sheets.15

As stated in the employment contract, AFF provided recommendation letters to the enumerators with career incentives (G1, G2, and G3) in May 2015. The recommendation letter was signed jointly by the director of AFF and the head of the Chimutu district. The letter specified the job description of an enumerator and his relative job performance.16

III. Data

We use data from various sources, including baseline and follow-up surveys, administrative data on training and job performance, and the Chimutu population census. First, we use data from the 2011 secondary school student survey. It contains rich information on a variety of areas covering demographics, socioeconomic status, health, and cognitive ability. Second, we use data from the 2014 baseline survey, which collects information on demographics, education, employment history, cognitive abilities, noncognitive traits, and HIV/AIDS-related outcomes.

We measure cognitive ability in two distinct ways. The first measure is math and English scores of the 2014 Malawi School Certificate of Education (MSCE) test, easily observable in the local labor market.17 The second measure is the scores of Raven's matrices test and the verbal and clerical ability tests of the O*NET, which are difficult to observe for potential employers. Data appendix A.1 provides the definitions of these cognitive ability measures.

Noncognitive traits include self-esteem, intrinsic motivation, extrinsic motivation, and the Big Five personality test (extraversion, openness, conscientiousness, agreeableness, and neuroticism). The additional baseline survey conducted from April to June 2015 collected data on risk and time preferences and rational decision-making ability using the tests developed by Choi et al. (2014).18

Training outcomes are measured by a quiz score and the proportion of erroneous entries in a practice survey.19 The quiz tested specific knowledge on the census details. It consists of twelve questions, a mixture of open-ended and true/false questions. The full text of the quiz is presented in figure A.4.

Main job performance measures during the census are survey quantity and quality. Survey quantity is measured by the number of households surveyed by each enumerator per day and survey quality by the proportion of systematically inconsistent or incorrect entries in the census questionnaire specific to each household surveyed. For example, if a respondent has a child, the information about her child should be filled in. If not, it is counted as an error. Data appendix A.2 provides the details about how we calculate the survey error rate. We also use SPE measured by census respondents because we expect enumerators to give good impressions to community members as an NGO worker who serves local communities. During the PES, census respondents were asked to evaluate how carefully the enumerator had explained the questions.20 In addition, after the completion of the census, twelve supervisors jointly evaluated the work attitude of each enumerator (SPEs measured by AFF supervisors).21

Finally, census data were used to calculate the average characteristics of the catchment area so that we could use them as the control vector in the main regression analysis. 22

Columns 2 and 3 of table A.2 present the baseline characteristics of the Internship and Wage groups, respectively. The results of the first- and second-stage randomization balance are presented in columns 4, 5, and 6. Panel A represents individual baseline characteristics of study participants. Study participants are about 20 years old, and only 9% work in the official sector, reflecting weak labor demand in Malawi.23 Data appendix A.1 provides the specific definition of the variables presented in panel A. Panel B represents the catchment area characteristics where enumerators were dispatched. The results confirm that the study groups are well balanced: the proportion of statistically significant mean difference at the 10% significance level is 2 out of 28 (7.1%) in column 4, 3 out 28 (10.7%) in column 5, and 4 out of 28 (14.3%) in column 6.

We also examine whether the baseline survey participants and nonparticipants are systematically different. Table A.3 shows that they are not statistically different from each other in most dimensions except for the household asset score. In addition, table A.4 shows no systematic differences across enumerators assigned to each supervisor team, which confirms that the supervisor team randomization went well.

IV. Main Results

A. Job Offer Take-Up

Column 1 of table 2 shows that the job offer take-up rates between the Internship and Wage groups are not statistically different. We test multidimensional sorting discussed in Dohmen and Falk (2011) by exploring whether career and wage incentives attract those with different observable characteristics. Columns 2 to 18 of table 2 show the regression results of the following equation:
Accepti=α+δ×Internshipi+λ×Traiti+φ×Internshipi×Traiti+εi,
(1)

where Accepti is a binary indicator that equals 1 if individual i accepted a job offer and 0 otherwise. Internshipi is a binary indicator if individual i belongs to the Internship group and the omitted category is the Wage group. Traiti is an individual characteristic variable that we evaluate one by one. εi is an error term. We test whether career incentives attract workers differently over a variety of individual characteristic including demographic and socioeconomic characteristics, cognitive ability index, and noncognitive traits.

Table 2.
Job Offer Acceptance by Individual Trait
Dependent Variable: Job Offer Acceptance(1)(2) Age(1) Number of Siblings(4) Asset Score(5) Currently Working(6) Self-Esteem(7) Intrinsic Motivation(8) Extrinsic Motivation(9) Extroversion
Trait  .042 .038* −.068* −.107 −.024** −.012 −.019 −.058* 
  (.030) (.019) (.040) (.136) (.010) (.108) (.136) (.032) 
Internship group −.024 −.323 −.029 −.023 −.025 −.321 .521 .733 −.297* 
 (.052) (.747) (.131) (.085) (.055) (.278) (.491) (.520) (.173) 
Trait × Internship  .015 −.002 −.009 .028 .015 −.176 −.266 .077* 
group  (.037) (.028) (.054) (.180) (.014) (.157) (.182) (.046) 
Constant .481*** −.372 .326*** .558*** .491*** .931*** .517 .537 .683*** 
 (.055) (.613) (.094) (.073) (.057) (.205) (.336) (.387) (.126) 
Observations 362 362 362 362 362 362 362 361 358 
R2 .018 .046 .036 .036 .021 .034 .027 .031 .027 
Mean (SD)  20.4 (1.65) 4.39 (1.80) 1.14 (.896) .086 (.280) 19.3 (3.69) 3.09 (.340) 2.84 (.282) 3.54 (1.16) 
Dependent Variable (Job offer acceptance) (10) Agreeableness (11) Conscientiousness (12) Emotional Stability (13) Openness to Experiences (14) Time Preference (15) Risk Preference (16) Rational Decision-Making Ability (17) MSCE Score (18) Raven and O*NET Score 
Trait −.001 .046* .011 −.001 .196 .288 −.019 −.051 −.140*** 
 (.027) (.026) (.027) (.027) (.284) (.498) (.274) (.040) (.053) 
Internship group .025 .251 .145 .041 −.096 .388 −.228 −.028 −.035 
 (.196) (.216) (.195) (.187) (.158) (.413) (.305) (.052) (.052) 
Trait × Internship −.010 −.049 −.033 −.013 .199 −.644 .257 −.033 −.050 
group (.037) (.037) (.037) (.035) (.384) (.640) (.363) (.056) (.071) 
Constant .486*** .223 .426*** .485*** .407*** .299 .502** .483*** .496*** 
 (.148) (.152) (.148) (.148) (.130) (.324) (.234) (.055) (.053) 
Observations 362 361 360 362 334 335 334 362 362 
R2 .019 .026 .020 0.019 .024 .019 .019 0.033 .069 
Mean (SD) 5.11 (1.39) 5.68 (1.35) 5.07 (1.45) 5.36 (1.35) .396 (.144) .635 (.083) .826 (.149) −.013 (.857) .037 (.658) 
Dependent Variable: Job Offer Acceptance(1)(2) Age(1) Number of Siblings(4) Asset Score(5) Currently Working(6) Self-Esteem(7) Intrinsic Motivation(8) Extrinsic Motivation(9) Extroversion
Trait  .042 .038* −.068* −.107 −.024** −.012 −.019 −.058* 
  (.030) (.019) (.040) (.136) (.010) (.108) (.136) (.032) 
Internship group −.024 −.323 −.029 −.023 −.025 −.321 .521 .733 −.297* 
 (.052) (.747) (.131) (.085) (.055) (.278) (.491) (.520) (.173) 
Trait × Internship  .015 −.002 −.009 .028 .015 −.176 −.266 .077* 
group  (.037) (.028) (.054) (.180) (.014) (.157) (.182) (.046) 
Constant .481*** −.372 .326*** .558*** .491*** .931*** .517 .537 .683*** 
 (.055) (.613) (.094) (.073) (.057) (.205) (.336) (.387) (.126) 
Observations 362 362 362 362 362 362 362 361 358 
R2 .018 .046 .036 .036 .021 .034 .027 .031 .027 
Mean (SD)  20.4 (1.65) 4.39 (1.80) 1.14 (.896) .086 (.280) 19.3 (3.69) 3.09 (.340) 2.84 (.282) 3.54 (1.16) 
Dependent Variable (Job offer acceptance) (10) Agreeableness (11) Conscientiousness (12) Emotional Stability (13) Openness to Experiences (14) Time Preference (15) Risk Preference (16) Rational Decision-Making Ability (17) MSCE Score (18) Raven and O*NET Score 
Trait −.001 .046* .011 −.001 .196 .288 −.019 −.051 −.140*** 
 (.027) (.026) (.027) (.027) (.284) (.498) (.274) (.040) (.053) 
Internship group .025 .251 .145 .041 −.096 .388 −.228 −.028 −.035 
 (.196) (.216) (.195) (.187) (.158) (.413) (.305) (.052) (.052) 
Trait × Internship −.010 −.049 −.033 −.013 .199 −.644 .257 −.033 −.050 
group (.037) (.037) (.037) (.035) (.384) (.640) (.363) (.056) (.071) 
Constant .486*** .223 .426*** .485*** .407*** .299 .502** .483*** .496*** 
 (.148) (.152) (.148) (.148) (.130) (.324) (.234) (.055) (.053) 
Observations 362 361 360 362 334 335 334 362 362 
R2 .019 .026 .020 0.019 .024 .019 .019 0.033 .069 
Mean (SD) 5.11 (1.39) 5.68 (1.35) 5.07 (1.45) 5.36 (1.35) .396 (.144) .635 (.083) .826 (.149) −.013 (.857) .037 (.658) 

Robust standard errors are reported in parentheses. Significant at ***1%, **5%, and *10%. “Asset Score” is the sum of items owned out of improved toilet, refrigerator, and bicycle. See data appendix A.1 for the definitions of MSCE score, Raven and O*NET score, and noncognitive trait variables.

Our coefficient of interest is φ, which captures differential take-up of a job offer between the Internship group and the Wage group by individual traits. We find that none of the estimates of φ across individual traits are statistically significant at the 5% level.24 These findings imply that observable characteristics are not likely to predict self-selection.

Table A.5 provides additional evidence on self-selection by comparing the observable characteristics of job offer takers between the Internship and the Wage groups. The results in table A.5 confirm the results in table 2 that the two groups are not systematically different in terms of both statistical and economic significance.25

The absence of systematic differences in observable characteristics does not necessarily mean that unobservable characteristics, training outcomes, and job performance would be the same if some of the unobservable characteristics were to affect training outcomes and job performance.

B. Training Outcomes

Although we do not find any differences in observable characteristics between job takers of the two groups, we might find a difference in training outcomes if career and wage incentives attract people with different unobservable characteristics. Panel A of figure A.5 displays the kernel density estimates of the training outcomes measured by the quiz score and the practice survey error rate. Table 3 shows the corresponding results from the following specification:
Trainingi=α+β×Internshipi+ωi,
(2)
where Trainingi is the training outcomes such as practice survey error rate and quiz score for individual i. For the practice survey error rate regression, we control for a practice survey type and pair–fixed effect in the regression.26
Table 3.
Training Performance
Quiz ScorePractice Survey Error Rate
Dependent Variable(1)(2)(3)(4)(5)
Panel A: 148 trainee sample 
Internship group −2.01*** −1.96*** .104*** .089*** .323 
 (.344) (.303) (.026) (.029) (.206) 
Observations 148 148 148 148 148 
R2 .228 .534 .114 .239 .811 
Wage group mean (SD) 8.43 (1.82) .272 (.142) 
Panel B: 137 enumerator sample 
Internship group −1.44*** −1.47*** .094*** .080*** .302 
 (.329) (.286) (.028) (.030) (.210) 
Observations 137 137 137 137 137 
R2 .163 .511 .099 .243 .862 
Wage Group Mean (SD) 8.43 (1.82) .272 (.142) 
Individual characteristics No Yes No No Yes 
Practice survey pair FE No No No Yes Yes 
Quiz ScorePractice Survey Error Rate
Dependent Variable(1)(2)(3)(4)(5)
Panel A: 148 trainee sample 
Internship group −2.01*** −1.96*** .104*** .089*** .323 
 (.344) (.303) (.026) (.029) (.206) 
Observations 148 148 148 148 148 
R2 .228 .534 .114 .239 .811 
Wage group mean (SD) 8.43 (1.82) .272 (.142) 
Panel B: 137 enumerator sample 
Internship group −1.44*** −1.47*** .094*** .080*** .302 
 (.329) (.286) (.028) (.030) (.210) 
Observations 137 137 137 137 137 
R2 .163 .511 .099 .243 .862 
Wage Group Mean (SD) 8.43 (1.82) .272 (.142) 
Individual characteristics No Yes No No Yes 
Practice survey pair FE No No No Yes Yes 

Robust standard errors are reported in parentheses. Significant at ***1%, **5%, and *10%. All specifications (columns 1–5) include the number of siblings and binary indicators for previous AFF programs. The practice survey error rate regression includes a binary indicator for the survey questionnaire type. Columns 2, 4, and 5 include age, asset score, MSCE score, Raven and O*NET score, and a set of noncognitive traits (self-esteem, intrinsic and extrinsic motivation, and Big 5 personality items). Columns 4 and 5 include dummies for each trainee pair who conducted the practice survey with each other.

Panel A of figure A.5 shows that the Wage group performs better than the Internship group in terms of both quiz score and practice survey error rate. Panel A of table 3 provides corresponding results from the regression. It confirms that the quiz score of the Internship group trainees is 2.0 points (23.8%) lower than that of the Wage group trainees, as shown in column 1. Similarly, the survey error rate is 10.4 percentage points (38.2%) higher among the Internship group trainees than that among the Wage group trainees, as shown in column 3.

At the end of the training, AFF disqualified eleven trainees who did not meet the minimum qualification requirement. As the above-mentioned regression results indicate, the Internship group performed worse than the Wage group did. Thus, all dropouts (eleven trainees) came from the Internship group only. Panel B of table 3 presents the training outcomes of enumerators dispatched to the field by excluding the eleven training failures. The regression results between the two panels are qualitatively similar, but the magnitude of the coefficient estimates is larger in panel A than in panel B because those who failed training are all from the Internship group.

The specification used in columns 2 and 5 is to test whether individual observable characteristics can explain the differences in the training outcomes between the two groups. The individual observable characteristics include age, household asset score, cognitive ability index, and noncognitive traits, such as self-esteem, intrinsic and extrinsic motivation, and Big 5 personality scales. We find similar coefficient estimates between columns 1 and 2. For example, observable characteristics explain only 2.5% ((2.01 − 1.96)/2.01) of the difference in quiz score. In the case of the practice survey error rate, controlling for individual characteristics in column 5 makes coefficient estimates statistically insignificant and larger. These findings imply that observable characteristics are limited in explaining the difference in the training outcomes.

In summary, we find that those attracted by a job offer with wage incentives outperformed those attracted by a job offer with career incentives in the training. This difference could be caused by workers with different characteristics selecting into different work incentives, thereby creating the difference in the training outcomes (selection effect).

However, the observed difference in training performance could be different from the true selection effect for several reasons. For instance, those in the Internship group have an incentive to exert more effort than those in the Wage group due to the future job prospect of the career incentives. That is, in the absence of such an effect, the difference in training performance due to selection could be larger than the observed difference in training performance. Or the difference in training performance due to selection could be smaller if there was a learning-by-doing effect for training instructors. Instructors could deliver lectures more efficiently in the second session (for the Wage group) than in the first session (for the Internship group). Therefore, the analysis of the training results should be interpreted with caution due to these possibilities that can potentially bias the selection effect.

C. Selection Effect of Career Incentives on Labor Productivity

In this section, we examine the selection effect of career incentives evaluated against wage incentives on job performance. As previously discussed, G2 and G3 have the same incentives at work, but the channels by which they were recruited are different. Therefore, we interpret differences in performance as driven by the selection effect.

Our identifying assumption is that G2 and G3 enumerators perceive their work incentives identical at work even though the sequences by which career and wage incentives were presented are different. The different sequence could form different perceived valuation of the incentives that affect enumerators' feelings, leading to different levels of work efforts. As a result, our estimates of the selection effect would be biased, as Abeler et al. (2011) discussed. However, we argue this is unlikely. If there were such a difference in feelings, we expect that differences in job performance would become smaller over time because the difference in feelings might diminish with time. Figure A.6 shows that the difference in job performance is fairly constant over time.27

Panel B of figure A.5 suggests that G2 has higher labor productivity than G3 in terms of survey quality and quantity. This finding is surprising because the Wage group had better training outcomes than the Internship group did. We test this graphical evidence formally by estimating the following equation,
Yijklt=α+β×G2j+γ×Hik+φ×Zk+Vlt+σt+ψijklt,
(3)

where Yijklt is job performance measured in the survey collected from household i by enumerator j whose supervisor is l, in catchment area k, surveyed on the tth workday. G2j is 1 if enumerator j belongs to G2 and 0 if he belongs to G3. Hik is a vector of respondents' household characteristics, and Zk is a vector of catchment area characteristics.28Vlt is the supervisor team-specific post-visit effect, and σt is the survey date fixed effect.29ψijklt is an error term. Standard errors are clustered at the catchment-area level. For dependent variables, we use survey quality measured by the survey error rate (Errorijktl) and survey quantity measured by the number of surveys per day (Surveyjktl).

Panel A of table 4 presents the regression results from equation (3). We find that G2 outperforms G3 in two main measures of job performance, even though G3 outperforms G2 during the training. The error rate is 2.2 percentage points (28.6%) lower in G2 than G3, as shown in column 1. The survey quantity of G2 is higher than that of G3 by 1.39 households per day (13.0%), as shown in column 4.

Table 4.
Selection and Incentive Effects of Work Incentives on Job Performance
Survey Quality (error rate)Survey Quantity (number of surveys per day)
Variables(1)(2)(3)(4)(5)(6)
Panel A: Selection effect (G2 versus G3)    
G2 −.022** −.023** −.023** 1.39** 1.29** 1.09* 
 (.009) (.009) (.009) (.610) (.542) (.611) 
Observations 11,130 11,130 11,130 1,003 1,003 1,003 
R2 .162 .307 .308 .145 .170 .180 
Mean (SD) of G3 .077 (.078) 10.7 (5.45) 
Panel B: Incentive effect of career incentives (G3 versus G4)   
G3 .007 .006 .006 −.763 −1.14* −1.14* 
 (.009) (.010) (.010) (.681) (.628) (.613) 
Observations 11,775 11,775 11,775 1,063 1,063 1,063 
R2 .189 .269 .276 .152 .195 .199 
Mean (SD) of G4 .082 (074) 11.5 (6.36) 
Panel C: Incentive effect of wage (G1 versus G2)   
G2 −.038** −.022** −.019* 1.05 .644 .247 
 (.016) (.010) (.010) (.879) (.941) (.999) 
Observations 9,779 9,779 9,779 914 914 914 
R2 .178 .357 .358 .203 .232 .242 
Mean (SD) of G1 .075 (.068) 9.84 (5.19) 
Panel D: Combined effect (G1 versus G4)   
G1 −.001 −.003 −.005 −1.41 −.732 −.259 
 (.015) (.013) (.013) (1.31) (1.18) (1.06) 
Observations 10,424 10,424 10,424 974 974 974 
R2 .194 .276 .277 .157 .232 .235 
Mean (SD) of G4 .082 (074) 11.5 (6.36) 
Individual characteristics No Yes Yes No Yes Yes 
Training performance No No Yes No No Yes 
Survey Quality (error rate)Survey Quantity (number of surveys per day)
Variables(1)(2)(3)(4)(5)(6)
Panel A: Selection effect (G2 versus G3)    
G2 −.022** −.023** −.023** 1.39** 1.29** 1.09* 
 (.009) (.009) (.009) (.610) (.542) (.611) 
Observations 11,130 11,130 11,130 1,003 1,003 1,003 
R2 .162 .307 .308 .145 .170 .180 
Mean (SD) of G3 .077 (.078) 10.7 (5.45) 
Panel B: Incentive effect of career incentives (G3 versus G4)   
G3 .007 .006 .006 −.763 −1.14* −1.14* 
 (.009) (.010) (.010) (.681) (.628) (.613) 
Observations 11,775 11,775 11,775 1,063 1,063 1,063 
R2 .189 .269 .276 .152 .195 .199 
Mean (SD) of G4 .082 (074) 11.5 (6.36) 
Panel C: Incentive effect of wage (G1 versus G2)   
G2 −.038** −.022** −.019* 1.05 .644 .247 
 (.016) (.010) (.010) (.879) (.941) (.999) 
Observations 9,779 9,779 9,779 914 914 914 
R2 .178 .357 .358 .203 .232 .242 
Mean (SD) of G1 .075 (.068) 9.84 (5.19) 
Panel D: Combined effect (G1 versus G4)   
G1 −.001 −.003 −.005 −1.41 −.732 −.259 
 (.015) (.013) (.013) (1.31) (1.18) (1.06) 
Observations 10,424 10,424 10,424 974 974 974 
R2 .194 .276 .277 .157 .232 .235 
Mean (SD) of G4 .082 (074) 11.5 (6.36) 
Individual characteristics No Yes Yes No Yes Yes 
Training performance No No Yes No No Yes 

Robust standard errors clustered at the catchment area level are reported in parentheses. Significant at ***1%, **5%, and *10%. All specifications (columns 1–6) include the number of siblings, catchment area characteristics, supervisor team-specific post-visit variables, survey date fixed effect, and binary indicator variables for previous AFF programs. Catchment area characteristics include the total number of households, catchment area size, family size, asset score, number of births in the past three years, incidence of malaria among children under 3, and deaths in the past twelve months. Columns 2, 3, 5, and 6 include age, asset score, MSCE score, Raven and O*NET score, and a set of noncognitive traits (self-esteem, intrinsic and extrinsic motivation, and Big 5 personality items). Columns 3 and 6 also include the two measures of training performances: the quiz score and practice survey error rate.

To assess how much observable individual characteristics and training performance can explain the selection effect estimated in columns 1 and 4, we control for enumerator characteristics such as demographic and socioeconomic status, cognitive ability (MSCE scores and Raven's matrices/O*NET scores), and noncognitive traits in columns 2 and 5, as well as training performance in columns 3 and 6. As shown in columns 2 and 5, observable individual characteristics of enumerators are limited in explaining the estimated selection effect. On survey quality, the inclusion of observed individual characteristics does not explain the estimated selection effect of career incentives at all. It explains survey quantity only by 7.2% ((1.39 − 1.29)/1.39). Additionally controlling for training performance also remains limited in explaining the selection effects.

We present the selection effect on SPEs in table A.6. G2 has a 67.9% higher SPE score by survey respondents than G3, as shown in column 1. Adding enumerator characteristics explains only 7.0% of the selection effect on SPE by respondents. This result is consistent with the fact that the observable characteristics of job takers between the Internship group and the Wage group are not different. Finally, we find that the SPE score by supervisors is higher in G3 than in G2 (column 4), but it is not statistically significant at the 5% level. We do not control for σt and Vlt when we analyze SPE score by supervisors because it does not vary over time and catchment area.

In table A.7, we report the results that decompose the main outcomes. To understand where survey errors come from, we decompose errors into incorrectly entered entries (e.g., filling in 179 for a person's age) and incorrectly missing entries (e.g., a child is present in the household but his or her age is missing). To better understand how survey quantity changes, we conduct regression analyses on three time-use variables such as total work hours per day, average survey time per household, and intermission time between surveys.30 Column 3 in panel A indicates that the selection effect of career incentives on survey quality reported in table 4 is mostly driven by the decrease in incorrectly missing entries. In addition, we find that the selection effect of career incentives on survey quantity comes from longer work hours, shorter survey time per household, and shorter intermission time as shown in columns 5 to 10 of table A.7. However, these coefficient estimates are not precisely estimated. We find that observable enumerator characteristics and training performance do not explain differences between G2 and G3 much.

Then, why do G2 enumerators outperform G3 enumerators in actual job performance, while the Wage group outperforms the Internship group during training? One possible explanation is that different skill sets are required in each setting. The test taken during the training was in a classroom setting, while job performance resulted from actual interactions with respondents in the field. It is plausible that enumerators selected through career incentives have comparative advantages in on-the-job performance but not in tests in a classroom setting. A critical characteristic of an enumerator is the skill to ask strangers sensitive questions about their households. This kind of skill might not be captured easily in a test taken in a laboratory setting.31

D. Incentive Effects of Work Incentives on Labor Productivity

To measure causal impacts of career incentives on labor productivity, we compare the job performance of enumerators who receive both wage and career incentives (G3) and that of enumerators with wage incentives only (G4). Similarly, we measure causal impacts of wage incentives by comparing job performance between enumerators with only career incentives (G1) and enumerators with both career and wage incentives (G2). We estimate incentive effects of wage and career incentives among job takers of the Internship and Wage groups, respectively; therefore, these incentive effects are not directly comparable. Panels B and C of table 4 report the incentive effects of career and wage incentives on job performance estimated among the Wage and Internship groups, respectively. Panels C and D in figure A.5 present the corresponding graphical evidence.

Our conceptual framework predicts that the additional provision of career incentives would motivate enumerators to exert more effort and improve job performance. However, in panel B of table 4, we find no such evidence in main labor productivity outcomes. However, column 4 of table A.6 shows that SPE measured by supervisors significantly increases by 51.5%. In summary, career incentives given to existing workers hired through the wage incentive channel do not improve labor productivity, but they induce enumerators to have better evaluation from supervisors. We speculate that the effort level of the Wage group enumerators was already high, and thus it is difficult for them to improve work performance at least in the short run. Rather, they exerted effort in building their relationships with supervisors.32

There might be a concern that, despite high-frequency data, the relatively small number of enumerators allows for the detection of only relatively large effects and makes it difficult to interpret null results. Indeed, we are somewhat underpowered in the regression analysis of panel B of table 4 in the sense that the size of the standard errors is not small enough to capture the small effect (if any) of the work incentives. To illustrate, we are able to capture the impacts of career incentive on survey quality and quantity only if the change is greater than 16.7% (0.007 × 1.96/0.082) and 13.0% (0.763 × 1.96/11.5), respectively.

Panel C of table 4 shows that wage incentives, additionally given to the Internship group enumerators, improve job performance. We find that survey errors decrease by 3.8 percentage points (a 50.1% decrease) in column 1 without statistically significant changes in survey quantity (column 5) and SPEs (panel C of table A.6). Panel C of table A.7 shows that the decrease in the survey error rate is explained mostly by a decrease in illogical missing entries, as shown in column 3.33 This finding is consistent with the gift exchange model of the efficiency wage theory formulated by Akerlof (1984). In the model, a worker exerts more efforts upon receiving a gift from an employer that exceeds the minimum level of compensation for the minimum level of effort. We also acknowledge that a part of the productivity improvements in G2 (evaluated against G1) might not be completely due to the gift exchange motive because the wage incentives include a performance bonus component.

Panel D of table 4, which compares G1 versus G4, resembles the combined effects of selection and incentive effects on productivity in that participants were attracted to accept a job offer via different incentives and the incentives at work also remained different. It is noteworthy that the combined effects of career incentives (panel D) are not necessarily a simple sum of the selection effect (panel A) and incentive effect (panel B), because of potential interaction between selection and incentive effects. In addition, the study sample used in panel D of table 4 is different from that in panels A and B. We find no significant difference in the combined effects between G1 and G4 in the main productivity outcomes, implying the importance of separating selection and incentive effects. However, we find that G1 enumerators have significantly better SPE by supervisors than G4 enumerators do (panel D of table A.6), which is consistent with the fact that career incentives causally improve SPE by supervisors in panel B.

V. Conclusion

This study analyzes how career and wage incentives affect labor productivity through a two-stage, randomized, controlled trial in the context of a recruitment drive for census enumerators in Malawi. Although career and wage incentives are the most common types of work incentives, to the best of our knowledge, no other study has considered these incentives in the same setting.

We find that career incentives of an internship significantly improve labor productivity through the self-selection of workers. The Internship group (those attracted by career incentives) outperformed the Wage group (those attracted by wage incentives) at work, even though the Wage group outperformed the Internship group during the training. Observable individual characteristics, including training outcomes, are limited in explaining the difference in labor productivity. The fact that neither observable characteristics nor training outcomes predict actual job performance implies that screening via observable characteristics is imperfect, particularly when hiring entry-level workers who have no track record of job history or credentials to verify their unobserved productivity. Furthermore, these findings highlight the importance of a recruitment strategy in attracting workers with strong unobservable skills via self-selection (e.g., an internship).

We find no positive evidence for the career incentive effects on labor productivity conditional on selection except for the SPE by supervisors. Our findings suggest that career incentives are effective in improving labor productivity mainly through the selection effect channel. Finally, we find that additional financial incentives can be an effective means to improve labor productivity (e.g., survey quality) for those recruited by career incentives. As a result, labor productivity is highest in G2, who were recruited by career incentives and received additional wage incentive.

We show how work incentives affect labor productivity among entry-level workers in Malawi. Therefore, our setting is closest to situations in which firms hire entry-level workers in developing countries whose productivity is not easily observable and worker characteristics are similar due to the similarity in contexts. Our analysis has implications for settings in which employers have difficulties screening productive workers with no or short employment history and are looking for effective means to motivate existing workers.

There are limitations to our study. First, we acknowledge that the approach by which we estimate the incentive effects might not perfectly characterize the real world. In the real world, workers might not always receive additional incentives without prior notice. Second, the length of the job we study is relatively short term. As such, we cannot study whether the estimated selection and incentive effects of career and wage incentives remain constant over longer periods. The short-term nature of our study also limits the analysis of the effects of work incentives on retention. Third, we do not directly observe the individual's perception of the value of work incentives. In addition, we do not measure how career and wage incentives change workers' belief about the probability of retention by AFF. Hence, we do not know whether the selection effect of career incentives operates through the expectation of a job prospect at AFF or a potentially favorable recommendation letter. Fourth, the noncognitive traits used in this study are self-reported psychometric scales measured based on a paper test. It would be interesting to know whether such paper-based and self-reported noncognitive traits are highly correlated with noncognitive traits measured in other settings. Fifth, the relatively small number of enumerators may prevent us from interpreting relatively small and insignificant effects, especially in estimating the career incentive effects. However, most major outcomes (selection effects and wage incentives effects) are large enough to detect their effects.

The difficulty in effective screening of job applicants and lack of motivation among existing workers are key drivers of low labor productivity, particularly in developing countries. A better understanding of selection and incentive effects of work incentives would allow employers to design optimal employment strategies. Based on our findings, we argue that active adoption of career incentives in the workplace as a hiring strategy could be an effective means to increase labor productivity of an organization hiring entry-level workers.

Notes

1

The incentive effect refers to the difference in labor productivity when incentives affect performance, holding employee composition constant. The selection effect refers to the difference in labor productivity driven by workers' self-selection into the job.

2

An internship is a temporary position that can be paid or unpaid and is distinguished from a short-term job in that it emphasizes on-the-job training for students or entry-level workers. Internship programs are widely available in Malawi in the public, private, and NGO sectors. For example, about 20% of regular workers in AFF are hired through the internship program.

3

An entry-level regular position (enumerator or data entry clerk) at AFF has career advancement prospects that lead to more advanced positions. AFF did not explicitly state the actual probability of being hired to the Internship group. We acknowledge that changing probabilities of being hired after the internship might affect effort levels, but we compare two different types of incentives, not different levels of the same incentives.

4

The comparison of G2 and G3 can be also interpreted as the selection effect of the wage incentives evaluated against the career incentives, but for the sake of convenience, we focus on the career incentives.

5

There were 536 eligible study subjects who were male and recent high school graduates in AFF's project areas. Of the 536, AFF provided job offers to a randomly selected group of 440. The other 96 subjects were also invited to participate in the baseline survey, although they did not receive a job offer. Individual characteristics and the balance between the two groups (440 versus. 96) are shown in table A.1.

6

Throughout this paper, “target study participants” refers to the 440 individuals who were invited to participate in the baseline survey, “study participants” refers to the 362 individuals who participated in the baseline survey; “trainees (job takers)” refers to the 148 individuals who joined the training; and “enumerators” refers to the 137 individuals who worked in the field.

7

MWK denotes Malawi kwacha. As of January 1, 2015, US$1 was equivalent to 466 MWK. Throughout the paper, we use this as the currency exchange rate.

8

AFF's catchment areas include the following four districts: Chimutu, Chitukula, Tsbango, and Kalumba. For details of AFF programs, see data appendix A.4.

9

Those who did not participate in the survey were unreachable (45%), refused to participate (13%), or could not participate in the survey because they were at school (32%) or working (10%).

10

This survey was conducted to measure time and risk preferences and rational decision-making ability after the census was completed under the assumption that these measures are not affected by our interventions. Out of 440 target study participants, 334 (76%) participated in the survey. We further discuss the data collected from these surveys in section III.

11

This rule gives an impression to enumerators that surveying 160 households is the de facto expectation of good performance. We acknowledge that this reference could increase or decrease average survey completion, but having a specific rule or a cut-off point about performance is unavoidable if an organization has to offer rule-based performance pay.

12

The prospect of a regular entry-level staff position at AFF whose entry-level monthly salary is 26,000 MWK (US$55.8) could be attractive.

13

We discuss this further in note 32.

14

Through the one-on-one meeting, AFF explained to G4 enumerators that their position would be a one-time employment opportunity even though it was not explicitly mentioned in the contract.

15

Hiring enumerators as regular staff members required the calculation of job performance after the completion of the census, which can take at least two months. Meanwhile, AFF hired 43 PES enumerators among 98 census enumerators with career incentives (G1, G2, and G3) on a temporary basis (two to three months) through a simple performance evaluation based on SPE by supervisors and error rates measured from five randomly selected surveys.

16

If an enumerator has higher job performance than the average, the letter specifies a very strong recommendation. If an enumerator has performance below the average, the letter specifies a somewhat lukewarm recommendation.

17

MSCE is an official test that all Malawian students must take to graduate from secondary school. AFF had access to the administrative MSCE score data via the cooperation of the Ministry of Education of the Republic of Malawi. We use math and English test scores only because they are mandatory subjects of the MSCE test.

18

As explained in section IIB, risk and time preferences and rational decision-making ability were measured after the census was completed. We included these measures in the randomization balance test under the assumption that these traits were not affected by our experiment. Data appendix A.1 provides the details of how we measure them.

19

The purpose of the practice survey was to practice interview skills before enumerators were dispatched to the field. The practice survey performance was evaluated as follows. First, we randomly matched two trainees. Each trainee in a randomly assigned pair received a prefilled census questionnaire sheet and a blank survey questionnaire sheet. Then one trainee interviewed the other matched trainee in the same pair and the latter trainee responded based on the assigned survey sheet. There were two types of prefilled questionnaire sheets with different hypothetical household information. Thus, trainees in the same pair acted as if they were two different households. Each trainee in every pair conducted this practice survey by changing roles. After conducting practice survey sessions, supervisors collected the survey sheets and calculated the error rate.

20

The question asked was, “Whenever you were confused or could not understand the meaning of any question, did the enumerator carefully explain the meaning of the questions to you?” We analyze SPE by census respondents only when the census respondent and the PES respondent were identical. The probabilities that an original census respondent was a PES respondent are 77%, 77%, 83%, and 82% for G2, G3, and G4, respectively. These rates are significantly different. Hence, the interpretation of the SPE analysis by respondents should be taken with caution.

21

We asked a group of supervisors to evaluate the general work attitude of enumerators. Enumerators were scored on a scale of 1 to 3.

22

Regarding catchment area size, we could not acquire information on the exact land size of each catchment area. However, we had an unofficial, categorical measure of land size ranging from 1 (smallest) to 10 (largest), jointly determined by AFF supervisors who have worked in the Chimutu district for five years or longer.

23

The employment rate of baseline survey nonparticipants is similar. We reached nonparticipants via phone calls, and 9.7% of them told us that they did not attend because they were working.

24

There might be concern about statistical power due to relatively small sample size (N=362). However, for most variables, we are able to detect 15% differences between the two groups. For example, column 2 of table 2 shows we are able to detect age difference between the two groups that is bigger than 0.07 (0.037 × 1.96) years, which is a 0.36% change ((0.07/20.4) × 100). Nonetheless, we cannot fully rule out the possibility that we are unable to detect small differences between the two groups. Therefore, the results should be interpreted with this caveat.

25

We acknowledge that study participants could have responded to the self-reported noncognitive tests in a way that they believed to be desirable from the perspective of a potential employer, even though they were not aware of the possibility of a job offer at the time of the baseline survey. This is consistent with the real world in which job seekers are not able to manipulate test scores (cognitive ability) in a preemployment test but might try to respond to a personality test in a way in which they have a desirable noncognitive skill.

26

All regressions include number of siblings, which is not balanced in the baseline, and eligibility for AFF's past interventions as a control vector. When analyzing the practice survey error rate, we additionally include survey pair fixed effect.

27

The different sequence could still generate bias if those recruited with career incentives might misunderstand the addition of wage incentives as a reward for good performance during training, while those recruited with wage incentives might misunderstand the addition of career incentives as a windfall gain, not a reward. However, this is also unlikely because we clearly indicated that the additional provision of incentives in the second stage was randomly determined.

28

Respondent's household characteristics include the fixed effect for family size. Catchment area characteristics include the total number of households, size of the catchment area, asset score, birthrate, malaria incidence, rate of birth with the assistance of a health professional, and death rate.

29

Vlt=η0+η1lI(t> First) +η2lI(t> Second) where First and Second are the dates of supervisor team l's first and second visits, respectively, to enumerator j.

30

Work hours per day are the difference between the beginning time of the first survey and the end time of the last survey of the day. Intermission time is defined as the difference between the beginning time of a survey and the end time of the previous survey. The survey beginning and end times were recorded as a part of the census questionnaire. However, there were sizable numbers of missing values, so we imputed those missing values (see data appendix A.3). The results remain similar even if we do not use the observations with imputed time values.

31

Alternatively, it is possible that the Internship group initially had lower performance in the training but caught up with the Wage group later in the field owing to a steeper learning curve. However, this is less likely, as we find no evidence of performance catch-up. Job performance between the Internship and Wage groups remained constant over the study period (see figure A.6 for the daily performance trend). It is also possible that screening out eleven trainees in the Internship group served as a reminder or a credible threat to those with career incentives that only some of them would be hired as regular workers in AFF, causing G2 to work harder than G3.

All 11 trainees who were dropped were from the Internship group. Therefore, if the labor productivity of the dropouts was lower than that of the hired enumerators, the performance-improving selection effects would be overestimated. However, we do not consider that any particular adjustment is necessary in the main analysis because screening out trainees who did not meet the minimum requirement is a regular business practice. Nevertheless, we reestimate equation (3) after dropping eleven trainees with the lowest training scores from the Wage group (six from G3 and five from G4). Panel A of table A.8 shows that the results for the selection effects remain mostly robust; the size of the coefficients for the selection effect on survey quality becomes smaller, while that for survey quantity becomes larger. We find similar results on incentive effects (panels B and C) and combined effects (panel D).

32

Another possibility is that career incentives might not be very appealing to enumerators recruited through wage incentives conditional on self-selection. For example, enumerators might not have needed a job for a longer period. Alternatively, the marginal effects of career incentives in the second stage could be small because enumerators had already received wage incentives in the first stage. However, this possibility does not explain an increase in SPE by supervisors. Finally, there exists concern that the differences in performance could be driven by the decrease in control group productivity due to disappointment at not receiving the second-stage incentives. However, this possibility is less likely because this psychological mechanism, if present, would decline over time as such feeling might diminish with time, which does not correspond to the results shown in Figure A.6.

33

One might wonder that the G1 enumerators who have career incentives performed poorly due to lack of money for meals in the field. To minimize this possibility, AFF informed all enumerators in advance that it would be difficult to find a shop or restaurant in the field, and encouraged them to bring enough of their own food during the work period. AFF ensured that the enumerators were able to use the kitchen for cooking at the prearranged housing during the census.

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External Supplements

Author notes

We are grateful to the following staff members of Africa Future Foundation for their field assistance: Narshil Choi, Jungeun Kim, Seungchul Lee, Hanyoun So, and Gi Sun Yang. We also thank Derek Lougee and Seollee Park for excellent research assistance. In addition, we thank Syngjoo Choi, Andrew Foster, Dan Hamermesh, Guojun He, Kohei Kawaguchi, Asim Khwaja, Etienne Lalé, Kevin Lang, Suejin Lee, Pauline Leung, Zhuan Pei, Cristian Pop-Eleches, Nick Sanders, Slesh Shrestha, and Jungmin Lee, as well as seminar participants at various seminars and conferences. This research was supported by the Singapore Ministry of Education Academic Research Fund Tier 1 grant. All errors are our own.

A supplemental appendix is available online at http://www.mitpressjournals.org/doi/suppl/10.1162/rest_a_00854.

Supplementary data