Primary Outcomes (end points)
The key outcomes of interest are at the firm or worker level. Specifically, we study:
Firm performance: Sales, costs, and profits will be first order measures of performance. We will also construct measures of sales and profit volatility by using the coefficient of variation (CV) of the respective base measures. Whether the firm accepted and delivered the order, the delivery time, product quality, and output per unit of input will also be included in this family of outcomes. Product quality will be assessed by independent experts in each sector based on a scoring rubric.
Worker outcomes: Earnings, earnings volatility, hours worked, employment status, wage contract type, payment timing, and bonuses are the key worker-level outcomes.
Organization of production: This family of outcomes assess changes in the organization of production at the firm. Task allocation, markups, owners’ time use, use of temporary workers, hiring or retention of permanent workers, renting or borrowing machines, and sharing orders or collaborating with other firms are some key outcomes of interest.
Retention, upgrading, and human capital accumulation: worker exit, training, specialization, supervisory and customer-facing responsibilities, and worker willingness to accept outside opportunities will be primary outcomes of interest.
The willingness to accept outside opportunities will be measured through an incentivized exercise in which we elicit workers’ willingness to pay/accept for a short-term self-employment opportunity.
In addition to self-reported measures of training received by the worker, we will also capture the owners’ willingness to pay/accept for a week-long training program for a randomly selected worker at their firm.
As the total size of the experimental order is fixed, but firms are heterogeneous in their size, we expect the experiment to induce differential demand shocks across firms of different sizes. For this reason, we will conduct heterogeneity analysis by baseline firm size, measured in terms of number of workers, revenues, and profits. Measures of risk aversion, for both owners and workers, as well as credit constraints (operationalized as prior/baseline access to credit) will also be used for heterogeneity analysis.
Additionally, the impact of the induced demand experiment can be mediated by the geographical proximity to other firms in the same sector. Consequently, firm density—the number of other firms within a 500m radius—is another dimension of heterogeneity that is of particular interest to our analysis.