IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v171y2024ics0304387824001032.html
   My bibliography  Save this article

Social ties at work and effort choice: Experimental evidence from Tanzania

Author

Listed:
  • Chegere, Martin J.
  • Falco, Paolo
  • Menzel, Andreas

Abstract

Many firms hire workers via social networks. Whether workers who are socially connected to their employers exert more effort on the job is an unsettled debate. We address this question through a novel experiment with small-business owners in Tanzania. Participants are paired with a worker who conducts a real-effort task, and receive a payoff that depends on the worker’s effort. Some business owners are randomly paired with workers they know, while others are paired with strangers. We find that being connected to one’s employer does not affect workers’ effort on average, but increases the effort of workers without children. Our results are consistent with workers having an altruistic drive in exerting effort when they work for someone they know, which fades away when their valuation of private income becomes stronger.

Suggested Citation

  • Chegere, Martin J. & Falco, Paolo & Menzel, Andreas, 2024. "Social ties at work and effort choice: Experimental evidence from Tanzania," Journal of Development Economics, Elsevier, vol. 171(C).
  • Handle: RePEc:eee:deveco:v:171:y:2024:i:c:s0304387824001032
    DOI: 10.1016/j.jdeveco.2024.103354
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304387824001032
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jdeveco.2024.103354?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. De Weerdt, Joachim & Dercon, Stefan, 2006. "Risk-sharing networks and insurance against illness," Journal of Development Economics, Elsevier, vol. 81(2), pages 337-356, December.
    2. Christian Dustmann & Albrecht Glitz & Uta Schönberg & Herbert Brücker, 2016. "Referral-based Job Search Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 514-546.
    3. repec:dau:papers:123456789/10840 is not listed on IDEAS
    4. Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1663-1705.
    5. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2010. "Social Incentives in the Workplace," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 417-458.
    6. Stefan Wager & Susan Athey, 2018. "Estimation and Inference of Heterogeneous Treatment Effects using Random Forests," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(523), pages 1228-1242, July.
    7. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    8. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009. "Social Connections and Incentives in the Workplace: Evidence From Personnel Data," Econometrica, Econometric Society, vol. 77(4), pages 1047-1094, July.
    9. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
    10. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    11. Lori Beaman & Jeremy Magruder, 2012. "Who Gets the Job Referral? Evidence from a Social Networks Experiment," American Economic Review, American Economic Association, vol. 102(7), pages 3574-3593, December.
    12. Francis Kramarz & Oskar Nordström Skans, 2014. "When Strong Ties are Strong: Networks and Youth Labour Market Entry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(3), pages 1164-1200.
    13. Kugler, Adriana D., 2003. "Employee referrals and efficiency wages," Labour Economics, Elsevier, vol. 10(5), pages 531-556, October.
    14. Boltz, Marie & Marazyan, Karine & Villar, Paola, 2019. "Income hiding and informal redistribution: A lab-in-the-field experiment in Senegal," Journal of Development Economics, Elsevier, vol. 137(C), pages 78-92.
    15. Marcel Fafchamps & Simon Quinn, 2018. "Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment," The World Bank Economic Review, World Bank, vol. 32(3), pages 656-675.
    16. Suresh de Mel & David McKenzie & Christopher Woodruff, 2013. "The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 122-150, April.
    17. Ponzo, Michela & Scoppa, Vincenzo, 2010. "The use of informal networks in Italy: Efficiency or favoritism?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 89-99, January.
    18. Kaivan Munshi & Mark Rosenzweig, 2016. "Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap," American Economic Review, American Economic Association, vol. 106(1), pages 46-98, January.
    19. Kaivan Munshi, 2003. "Networks in the Modern Economy: Mexican Migrants in the U. S. Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 549-599.
    20. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 423-423.
    21. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 39-58, January.
    22. Joachim De Weerdt & Marcel Fafchamps, 2011. "Social Identity and the Formation of Health Insurance Networks," Journal of Development Studies, Taylor & Francis Journals, vol. 47(8), pages 1152-1177, June.
    23. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
    24. Lasse Brune & Eric Chyn & Jason Kerwin, 2022. "Peers and Motivation at Work: Evidence from a Firm Experiment in Malawi," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1147-1177.
    25. Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
    26. Amrita Dhillon & Vegard Iversen & Gaute Torsvik, 2021. "Employee Referral, Social Proximity, and Worker Discipline: Theory and Suggestive Evidence from India," Economic Development and Cultural Change, University of Chicago Press, vol. 69(3), pages 1003-1030.
    27. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
    28. Livia Alfonsi & Oriana Bandiera & Vittorio Bassi & Robin Burgess & Imran Rasul & Munshi Sulaiman & Anna Vitali, 2020. "Tackling Youth Unemployment: Evidence From a Labor Market Experiment in Uganda," Econometrica, Econometric Society, vol. 88(6), pages 2369-2414, November.
    29. Patricia Cortés & Jessica Pan, 2023. "Children and the Remaining Gender Gaps in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 61(4), pages 1359-1409, December.
    30. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
    31. Fafchamps, Marcel & Gubert, Flore, 2007. "The formation of risk sharing networks," Journal of Development Economics, Elsevier, vol. 83(2), pages 326-350, July.
    32. Marcel Fafchamps & Flore Gubert, 2007. "Risk Sharing and Network Formation," American Economic Review, American Economic Association, vol. 97(2), pages 75-79, May.
    33. Sangyoon Park, 2019. "Socializing at Work: Evidence from a Field Experiment with Manufacturing Workers," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 424-455, July.
    34. Bruce Shearer, 2004. "Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 513-534.
    35. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 489-520.
    36. Abhijit Banerjee & Dean Karlan & Jonathan Zinman, 2015. "Six Randomized Evaluations of Microcredit: Introduction and Further Steps," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 1-21, January.
    37. Amanda Pallais & Emily Glassberg Sands, 2016. "Why the Referential Treatment? Evidence from Field Experiments on Referrals," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1793-1828.
    38. David McKenzie, 2021. "Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work’," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(2), pages 276-301.
    39. Rachel Heath, 2018. "Why Do Firms Hire Using Referrals? Evidence from Bangladeshi Garment Factories," Journal of Political Economy, University of Chicago Press, vol. 126(4), pages 1691-1746.
    40. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September.
    41. Stephen V. Burks & Bo Cowgill & Mitchell Hoffman & Michael Housman, 2015. "The Value of Hiring through Employee Referrals," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 805-839.
    42. Petter Lundborg & Erik Plug & Astrid Würtz Rasmussen, 2017. "Can Women Have Children and a Career? IV Evidence from IVF Treatments," American Economic Review, American Economic Association, vol. 107(6), pages 1611-1637, June.
    43. Wyatt Brooks & Kevin Donovan & Terence R. Johnson, 2018. "Mentors or Teachers? Microenterprise Training in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 196-221, October.
    44. Datcher, Linda P, 1982. "Effects of Community and Family Background on Achievement," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 32-41, February.
    45. Jean-Marie Baland & Catherine Guirkinger & Charlotte Mali, 2011. "Pretending to Be Poor: Borrowing to Escape Forced Solidarity in Cameroon," Economic Development and Cultural Change, University of Chicago Press, vol. 60(1), pages 1-16.
    46. Simon, Curtis J & Warner, John T, 1992. "Matchmaker, Matchmaker: The Effect of Old Boy Networks on Job Match Quality, Earnings, and Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 306-330, July.
    47. Girum Abebe & A. Stefano Caria & Esteban Ortiz-Ospina, 2021. "The Selection of Talent: Experimental and Structural Evidence from Ethiopia," American Economic Review, American Economic Association, vol. 111(6), pages 1757-1806, June.
    48. repec:dau:papers:123456789/4392 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Chegere & Paolo Falco & Andreas Menzel, 2023. "Social Ties at Work and Effort Choice: Experimental Evidence from Tanzania," CERGE-EI Working Papers wp763, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    2. Benjamin Lester & David A. Rivers & Giorgio Topa, 2021. "The Heterogeneous Impact of Referrals on Labor Market Outcomes," Staff Reports 987, Federal Reserve Bank of New York.
    3. Afridi, Farzana & Dhillon, Amrita, 2022. "Social Networks and the Labour Market," IZA Discussion Papers 15774, Institute of Labor Economics (IZA).
    4. Glitz, Albrecht, 2017. "Coworker networks in the labour market," Labour Economics, Elsevier, vol. 44(C), pages 218-230.
    5. Anandi Mani & Emma Riley, 2019. "Social networks, role models, peer effects, and aspirations," WIDER Working Paper Series wp-2019-120, World Institute for Development Economic Research (UNU-WIDER).
    6. Emre Ekinci, 2022. "Monetary rewards in employee referral programs," Manchester School, University of Manchester, vol. 90(1), pages 35-58, January.
    7. Arimoto, Yutaka & Machikita, Tomohiro & Tsubota, Kenmei, 2018. "Broker versus social networks in adverse working conditions: cross-sectional evidence from Cambodian migrants in Thailand," IDE Discussion Papers 686, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Nicoletta Berardi & Marie Lalanne & Paul Seabright, 2019. "Professional Networks and their Coevolution with Executive Careers," Working papers 723, Banque de France.
    9. Moon, Ji-Woong, 2023. "Strategic referrals and on-the-job search equilibrium," Journal of Monetary Economics, Elsevier, vol. 134(C), pages 135-151.
    10. Perihan Ozge Saygin & Andrea Weber & Michèle A. Weynandt, 2021. "Coworkers, Networks, and Job-Search Outcomes among Displaced Workers," ILR Review, Cornell University, ILR School, vol. 74(1), pages 95-130, January.
    11. Dhillon, Amrita & Peeters, Ronald & Muge Yukse, Ayse, 2014. "Overcoming Moral Hazard with Social Networks in the Worksplace: An Experimental Approach," CAGE Online Working Paper Series 183, Competitive Advantage in the Global Economy (CAGE).
    12. Dhillon, Amrita & Peeters, Ronald & Bartrum, Oliver & Yüksel, Ayşe Müge, 2020. "Hiring an employee’s friends is good for business: Overcoming moral hazard with social networks," Labour Economics, Elsevier, vol. 67(C).
    13. Afridi, Farzana & Dhillon, Amrita & Sharma, Swati, 2015. "Social Networks and Labour Productivity: A Survey of Recent Theory and Evidence," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 50(1), pages 25-42.
    14. Lena Hensvik & Oskar Nordström Skans, 2016. "Social Networks, Employee Selection, and Labor Market Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 825-867.
    15. Guido Friebel & Matthias Heinz & Mitchell Hoffman & Nick Zubanov, 2023. "What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice," Journal of Political Economy, University of Chicago Press, vol. 131(3), pages 633-686.
    16. Christian Dustmann & Albrecht Glitz & Uta Schönberg & Herbert Brücker, 2016. "Referral-based Job Search Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 514-546.
    17. Dariel, Aurelie & Riedl, Arno & Siegenthaler, Simon, 2021. "Referral hiring and wage formation in a market with adverse selection," Games and Economic Behavior, Elsevier, vol. 130(C), pages 109-130.
    18. Osman, Adam & Speer, Jamin D. & Weaver, Andrew, 2022. "Connections, Referrals, and Hiring Outcomes: Evidence from an Egyptian Establishment Survey," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 342-355.
    19. Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2015. "With a little help from my friends? Quality of social networks, job finding and job match quality," European Economic Review, Elsevier, vol. 78(C), pages 55-75.
    20. Emanuela Ghignoni, 2016. "The ?great escape? from Italian Universities: Do labour market recruitment channels matter?," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2016(106), pages 49-75.

    More about this item

    Keywords

    Firms; Hiring; Productivity; Social ties; Kinship networks;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:171:y:2024:i:c:s0304387824001032. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.