Kinship Pressure and Firm-Worker Matching Distortions

Last registered on August 19, 2023
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Pre-Trial

Trial Information

General Information

Title
Kinship Pressure and Firm-Worker Matching Distortions
RCT ID
AEARCTR-0011328
Initial registration date
April 24, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
May 03, 2023, 4:01 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
August 19, 2023, 1:55 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Zambia
Region

Primary Investigator

Name
Nicholas Swanson
Affiliation
University of California, Berkeley
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
In development
Start date
2023-04-25
End date
2023-11-30
Keywords
Firms & Productivity, Labor
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Many businesses in Sub-Saharan Africa choose to employ relatives. A common understanding of this phenomenon is that this reflects information assymetries or benefits to hiring from one’s network that alleviate moral hazard. In this project, I propose a different hypothesis: that some of this hiring may be driven by social norms or redistributive pressures, which maybe exacerbated by greater moral hazard among members of one’s network. I design a field experiment to examine the relevance of these redistributive pressures generating hiring distortions among Zambian microenterprises. I offer microenterprise owners a subsidy to hire an additional employee, and ask business owners to decide between hiring a relative or a non-relative candidate for the position. Microenterprise owners then make their choice under two conditions: a control condition, in the owner receives a poster explaining that they received a subsidy to hire a person and a treatment condition, in which employers are told that if they receive a subsidy, they will be given a poster explaining the subsidy AND that many business owners offered this subsidy do not have complete control over who is hired with the subsidy. The treatment poster is designed to provide business owners with plausible deniability for not hiring a particular employee, as compared to natural hiring conditions. I then test how the identity of the employee chosen changes under this treatment. The experiment outlined in this pre-registration is one that explores the hypothesis. An additional experiment involving rural employers may also be conducted as part of the same project (subject to budget and logistical constraints).
External Link(s)

Registration Citation

Citation
Swanson, Nicholas. 2023. "Kinship Pressure and Firm-Worker Matching Distortions." AEA RCT Registry. August 19. https://doi.org/10.1257/rct.11328-2.1
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
The treatment offers microenterprises different posters that vary the degree to which their involvement in who they choose to hire for their business is signalled to others.
Intervention Start Date
2023-04-28
Intervention End Date
2023-11-30

Primary Outcomes

Primary Outcomes (end points)
The primary outcomes from the experiment are:
1) Identity of chosen employee when offered equal subsidies for the relative and non-relative candidate
2) Compensating differential in terms of subsidies required to hire a relative (rather than a non-relative)
3) Audit score (proportion of times that the business is audited and the employee is there) for businesses that have the subsidy implemented.



In addition, to ensure that in the BDM the hiring decisions are made seriously, businesses will be audited after the the subsidy is implemented, to check whether the employee that the subsidy was given for is actually there.
Primary Outcomes (explanation)
The primary outcome in the experiment is how the identity of the employee chosen changes with the treatment. This elicited as both a simple binary measure, as well as a compensating differential elicited by offering different subsidy amounts. Finally an audit will be conducted of businesses that have the subsidies implemented to measure whether choices in the BDM translate into real hiring.

Secondary Outcomes

Secondary Outcomes (end points)
To the degree I have sufficient variation in the measures, I will look at heterogeneity in primary outcomes (except audit score) above by: 1) the amount of redistributive pressure that the business owner faces (elicited from survey questions) and 2) the degree that they for expect the relative employee to work harder/better or less hard/less well for them as compared to other non-related employers (elicited from survey questions) as well as 3) the characteristics of the job that the employer is hiring for (to the degree there is sufficient variation in this outcome). Additional exploratory heterogeneity might also be conducted (for example with respect to characteristics of the job, employer, employees etc.) Finally, I will elicit the willingness to pay for a treatment poster (rather than a control poster) among all business owners and correlate this also with the primary outcomes above.

Outcome subject to feasibility/budget:
If possible, I will also ask business owners who do not have the subsidy implemented to bring in their relative/non-relative and do a task with them. In this task I will measure 1) the business owner’s beliefs about task performance and 2) the actual performance under different conditions
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
In the experiment I offer microenterprises a subsidy and elicit preferences of who to hire under different conditions.
Experimental Design Details
Businesses are screened to receive the subsidy based on: 1) whether the business is willing to hire someone for their business if offered a subsidy, 2) whether the person spoken to is someone who has the ability to hire for the business (i.e. they are not someone managing the business who does not have hiring authority and, 3) whether the individual has relatives they can hire (relatives living nearby and willing to be hired).

A baseline survey is then conducted with both eligible and ineligible firms. Eligible firms are then explained they need to choose a relative and non-relative candidate to receive a subsidy for at the subsequent visit. Businesses are also explained the rules of the subsidy.

I offer microenterprise owners a subsidy to hire an additional employee. Microenterprise owners are asked to propose a relative and a non-relative candidate for the job. These individuals are not brought to the second visit, but the microenterprise is told that their identity will have to be verified before any subsidy is received. Microenterprise owners are then told that they will be offered one of three types of subsidy: 1) a subsidy that can only be used for a relative, 2) a subsidy that can only be used for a non-relative or 3) a subsidy that can be used to hire a relative or non-relative. The employer is then asked to make their choice of who to hire if they are in the choice group, prior to learning which of the 3 groups they are in.

Microenterprise owners are then randomized into one of two groups prior to making this choice of who to hire. In the control condition, in the owner receives a poster explaining that they received a subsidy to hire a person and a treatment condition, in which employers are told that if they receive a subsidy, they will be given a poster explaining the subsidy AND that many business owners offered this subsidy do not have complete control over who is hired with the subsidy. Relative to the control poster, the treatment poster is designed to provide business owners with plausible deniability for not hiring a particular employee, as compared to natural hiring conditions. Different subsidy amounts are then offered for the relative and non-relative, and a BDM is used to elicit the compensating differential required to hire a relative rather than a non-relative.

Finally the subsidies are then implemented for around 50 businesses out of the entire sample to ensure that the project is feasible. These businesses are audited multiple times per week and only succesfully audited businesses receive the subsidy. The subsidy is implemented for 3 months

In a second version of the trial, with an additional subset of businesses in a first visit I randomize businesses to receive an offer of a subsidy with or without a poster that creates a noisy signal of their involvement in the hiring process. As an outcome for this follow up survey, I measure whether the individual who is brought with each version of the poster is related to the business owner, or not.
Randomization Method
Randomization by computer
Randomization Unit
Individual, stratified by gender, market and whether the business has employees
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N/A
Sample size: planned number of observations
400-600 businesses depending on eligibility, take up of subidy opportunity. An additional 200 businesses in the follow up survey.
Sample size (or number of clusters) by treatment arms
Equal numbers will be assigned to the treatment and control poster conditions
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
UNZAREC
IRB Approval Date
2022-11-30
IRB Approval Number
1414-2020
IRB Name
University of California Berkeley
IRB Approval Date
2021-05-14
IRB Approval Number
2021-01-13963
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials