with Tahir Andrabi
Abstract: Attracting and retaining high-quality teachers has a large social benefit, but it is challenging for schools to identify good teachers ex-ante. This paper uses teachers' contract choices and a randomized controlled trial of performance pay with 7,000 teachers in 243 private schools in Pakistan to study whether performance pay affects the composition of teachers. Consistent with adverse selection models, we find that performance pay induces positive sorting: both among teachers with higher latent ability and among those with a more elastic effort response to incentives. Teachers also have better information about these dimensions of type than their principals. Using two additional treatments, we show effects are more pronounced among teachers with better information about their quality and teachers with lower switching costs. Accounting for these sorting effects, the total effect of performance pay on test scores is twice as large as the direct effect on the existing stock of teachers, suggesting that analyses that ignore sorting effects may substantially understate the effects of performance pay.
with Tahir Andrabi
Abstract: A central challenge facing organizations is how to incentivize employees. While high-powered incentives can motivate effort, they can lead employees to distort effort away from non-incentivized outcomes. This is one reason why most performance incentives allow for manager subjectivity. However, this subjectivity can introduce new concerns, including favoritism and bias. We study the effect of subjective versus objective performance incentives on employee productivity using a randomized controlled trial in nearly 250 Pakistani private schools. We estimate the effect of two performance raise treatments versus a control condition, in which all teachers receive the same raise. The first treatment arm is a “subjective” raise, in which principals evaluate teachers; the second treatment arm an “objective” raise based on student test scores. First, we show that both subjective and objective incentives are equally effective at increasing test scores. However, objective incentives decrease student socio-emotional development. Second, we show that these effects are likely driven by the types of behavior change we observe from teachers during classroom observations. In objective schools, teachers spend more time on test preparation and use more punitive discipline, whereas, in subjective schools, pedagogy improves. Finally, we investigate the mechanisms of these effects through the lens of a moral hazard model with multi-tasking. We exploit variation within each treatment to isolate the causal effect of contract noisiness and distortion on student outcomes. We then show that teachers perceive subjective incentives as less noisy and less distorted, and these contract features affect student outcomes, serving as key channels to explain the reduced form effects we see.
Attention as Human Capital
with Supreet Kaur, Geeta Kingdon and Heather Schofield
Abstract: Cognitive capacity—a key predictor of labor productivity—has traditionally been viewed as a fixed component of human capital. This project reexamines this view by testing whether attentional ability is endogenously shaped through one's socio-economic environment. We focus on a specific dimension of attention: the ability to sustain focus toward a task. We first document a novel fact: lower-income individuals exhibit larger attentional declines than more affluent ones across disparate field settings in both rich and poor countries—school tests, worker productivity, voting—and these declines help explain performance differences among the rich and poor. Next, through a field experiment with 1,650 low-income Indian primary school students, we increase the time devoted to focused cognitive activity during the school day, using either math or non-academic content. Each of these interventions improves the ability to sustain focus across a variety of unrelated domains—academic performance, listening retention, and IQ, as well as on traditional attentional ability measures—indicating that our interventions affected an underlying core resource. In addition, the interventions improve performance on school administered tests in core subjects. Our findings suggest that worse schooling environments may disadvantage poor children by hampering the development of cognitive capacity.
Work in Progress
Statistical and Financial Discrimination by Managers
Pakistan ranks in the lowest decile in female labor force participation, and even in sectors where women are more prevalent, such as teaching, they earn 70 cents for each dollar men earn. In this project, I test the extent to which statistical versus financial discrimination explains these pay gaps. I partner with 250 schools to randomly vary i). how often principals observe a given teacher and ii). whether principal evaluations have financial stakes for teachers. Under the first treatment arm, as principals have more exposure to a teacher, we can test whether statistical discrimination is reduced. Under the second treatment arm, we can see if principals reduce gender discrimination when their evaluations are un-linked to pay raises for teachers.
Data collection for this project is complete.
Search and Matching Frictions for Daily Wage Laborers
with Maryiam Haroon
In South Asia, three quarters of ultra-poor households report casual labour as the dominant form of income. In urban areas, short-term construction jobs are found through social connections or by going to a “labour stand”, essentially an intersection where low-skilled labourers wait each morning for employers looking to hire for a day or two. While spot markets like this are generally thought of to be the free-market ideal, these markets appear to be rife with failures including information asymmetries, wage rigidity and large search costs for employees and employers. The presence of these frictions often increases dependence on social relationships. In this project, we seek to answer why exactly employers hire workers from their social network, what are the mechanisms at play and, in response to variation in the hiring process, how do workers change their investment in social capital versus productivity? To test these questions we partner with a large construction firm and exogenously vary incentives incentives for contractors and information contractors have about worker productivity.
This project is currently in the field. More on this project here.