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The Allocation of Incentives in Multi-Layered Organizations: Evidence from a Community Health Program in Sierra Leone

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Listed:
  • Erika Deserranno
  • Stefano Caria
  • Philipp Kastrau
  • Gianmarco León-Ciliotta

Abstract

Does the allocation of incentives across the hierarchy of an organization matter for its performance? In a field experiment with a large public-health organization in Sierra Leone, we find that healthcare provision is highly affected by how incentives are allocated between frontline workers and their supervisors. Sharing incentives equally between these two layers raises completed health visits by 61% compared to the unilateral allocations that are typical in public-health organizations. Also, the shared incentives uniquely improve overall health service provision and health outcomes. We provide reduced form and structural evidence that these results are driven by a combination of effort complementarities and contractual frictions, and we explore the implications of these forces for the optimal design of incentive policies in multi-layered organizations.

Suggested Citation

  • Erika Deserranno & Stefano Caria & Philipp Kastrau & Gianmarco León-Ciliotta, 2022. "The Allocation of Incentives in Multi-Layered Organizations: Evidence from a Community Health Program in Sierra Leone," Working Papers 1346, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1346
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    References listed on IDEAS

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    More about this item

    Keywords

    Incentives; multi-layered organizations; hierarchies; effort complementarities; side payments; output;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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