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Field
Intervention (Hidden)
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Before
In this study, we plan to understand how negotiations between firms and workers vary with the type of job for which the worker is being hired.
Our setting is an urban labour stand in India, where workers from different parts of the city and nearby rural areas come to seek work (mostly in construction). Firms which are looking for workers come to the stand to hire workers. Firms offer two kinds of jobs, i) a job in which workers have to work for a fixed number of hours, usually for 8 hours in a day (including lunch), wherein the number and types of tasks to be performed can vary. We call these daily wage jobs; ii) a fixed work job in which the task is well-defined but the number of hours can vary.
First, we will collect data on the going wage for these two types of jobs at multiple labor stands. Our priors suggest that the (reservation) wage distribution for the same fixed work jobs is more likely to be spread out than for a daily wage job.
Secondly, we plan to collect data on negotiations between firms and workers in real-time in these labor stands for these two types of jobs. These stands have a much higher supply of labor than demand. Hence, one would expect that undercutting is common. We will observe negotiations on wage between firms and workers, and hence also observe whether workers try to undercut each other during these negotiations. Undercutting is considered to have taken place, when a worker comes to an ongoing negotiation between a firm and worker, and quotes a price below the price which the first worker had quoted. Our hypothesis is that undercutting is much more likely in fixed work jobs compared to daily wage jobs and this is because the priors over the reservation wage of the former are more varied than the latter.
In the third step, we will inform workers at a random subset of stands about the reservation wage of different workers over fixed wage jobs. This information would be put up as a poster at the stand. We will then measure the effect of this common knowledge on undercutting behavior of workers for fixed work jobs.
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After
In this study, we plan to understand how negotiations between firms and workers vary with the type of job for which the worker is being hired.
Our setting is an urban labour stand in India, where workers from different parts of the city and nearby rural areas come to seek work (mostly in construction). Firms which are looking for workers come to the stand to hire workers. Firms offer two kinds of jobs, i) a job in which workers have to work for a fixed number of hours, usually for 8 hours in a day (including lunch), wherein the number and types of tasks to be performed can vary. We call these daily wage jobs; ii) a fixed work job in which the task is well-defined but the number of hours can vary.
Belief data: First, we will collect data on the going wage for these two types of jobs at multiple labor stands . Our priors suggest that the (reservation) wage distribution for the same fixed work jobs is more likely to be spread out than for a daily wage job.
Negotiation data: Secondly, we plan to collect data on negotiations between firms and workers in real-time in these labor stands for these two types of jobs. These stands have a much higher supply of labor than demand. Hence, one would expect that undercutting is common. We will observe negotiations on wage between firms and workers, and hence also observe whether workers try to undercut each other during these negotiations. Undercutting is considered to have taken place, when a worker comes to an ongoing negotiation between a firm and worker, and quotes a price below the price which the first worker had quoted. Our hypothesis is that undercutting is much more likely in fixed work jobs compared to daily wage jobs and this is because the priors over the reservation wage of the former are more varied than the latter.
Experiment: In the third step, we will inform workers at a random subset of stands about the reservation wage of different workers over fixed wage jobs. This information would be put up as a poster at the stand. We will then measure the effect of this common knowledge on undercutting behavior of workers for fixed work jobs.
Vignette: In the fourth step, we will examine why dispersion arises in reservation wages or prevailing wages across the two types of jobs. Our primary hypothesis is that fixed-work jobs do not specify the number of hours required, so workers with different ability levels may complete the same task in different amounts of time. More productive workers can finish the task more quickly and gain additional leisure time. As a result, they may have lower reservation wages because they are willing to trade off some earnings for more leisure.
By contrast, daily-wage jobs specify the number of hours to be worked. Wage distributions for these jobs may therefore be less dispersed because differences in completion time and the associated leisure gains are not relevant.
We will test this hypothesis by collecting data from around 200 workers through a vignette survey on: (i) the expected hours required to complete a task and the wage quoted for fixed-work jobs; and (ii) workers’ beliefs about how wage demands vary across workers depending on the number of hours they expect to take to complete a fixed-work job iii) Norms around going wage for daily wage and fixed-wage jobs.
This does not imply that social norms play no role. Rather, norms may be less prevalent for fixed-work jobs because differences in worker ability, which affect wages in these jobs, may prevent common wage norms from developing.
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