Francis de Vericourt
European School of Management
and Technology ESMT
NBER Working Papers and Publications
|January 2014||Anatomy of a Contract Change|
with Rajshri Jayaraman, Debraj Ray: w19849
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.
Published: American Economic Review, vol. 106, no. 2, February 2016 (pp. 316-58) citation courtesy of