Working Together or Never: Labor Supply Externalities and the Unemployment Trap

To test for the presence of labor supply externalities and multiple employment equilibria, we will randomly vary the intensity of job offers across redistributive networks – offering actual positions at a local cashew-nut processing factory.
If redistributive pressure is leading to multiple equilibria, we anticipate that saturating a network with positions will lead to greater take-up of our job opportunities (and greater labor supply on the intensive margin).
Other mechanisms may also contribute to greater take-up of joint offers (with similar multiple equilibria in labor supply). As an illustration, network complementarities in the return to leisure, or in commuting, may be relevant.
To alleviate redistributive pressures faced by a potential worker, providing job opportunities to network members is an option. Another is to provide direct cash payments to those network members, corresponding in size and frequency to the transfers they would have received from that potential worker – making those payments public to the latter so that they substitute for the pressures she faces.
While a random subset of networks will be treated with the first option, another will be treated with the second option. If redistributive pressures are indeed driving the observed labor complementarities, the effects should be similar in both cases.

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* The design has been updated to include a second phase to the experiment. It is described in the document attached to this submission on March 16th, 2022.
* The design has been updated to include a third phase to the experiment. It is described in the document attached to this submission on July 21st, 2022.

2020-08-02

2022-11-30

Our key outcome variables relate to the employment status of the individuals who have been offered the jobs. Specifically, we will look at the effect of the intervention on job take-up and retention, as well as on productivity (measured by daily output) if possible.

We will attempt to collect data on transfers among individuals in the network. However, since surveys currently need to be conducted via phone, it is possible that it will prove infeasible to collect this information.

We will start with a set of potential applicants for the jobs offered at Olam’s new factory, opening in the summer of 2020. They will be randomized into three groups:

- C – Control: job offered to the potential applicant
- T1 – Jobs in Network: job offered to the potential applicant + job offered to at least 2 members of the potential applicant’s network
- T2 – Cash in Network: job offered to the potential applicant + cash payments to at least 2 members of the potential applicant’s network

We will first survey potential applicants, primarily to elicit their redistributive network members, and inform them of their treatment assignment.
We will then survey their network members, and inform them of their treatment assignment (if any).

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* The design has been updated to include a second phase to the experiment. It is described in the document attached to this submission on March 16th, 2022.
* The design has been updated to include a third phase to the experiment. It is described in the document attached to this submission on July 21st, 2022.
* The design has been updated to include an endline survey to the third phase to the experiment. It is described in the document attached to this submission on November 21st, 2022.

In “T1 – Jobs in Network”, the jobs offered to at least two members of the potential applicant’s network are jobs at the same factory than the job offered to the potential applicant. Applicants will be informed that at least two members of his or her network will be offered jobs.

In “T2 – Cash in Network”, at least two members of the applicant’s network will be offered cash. The cash payments will be some small, time-bound payments framed as part of a Covid-relief assistance program, and will be clearly separated from the employment status at Olam of the potential job applicant. The applicant will be informed that at least two members of his or her network will receive cash.

If possible (based on operational constraints), we will randomize to which shift the workers are assigned (hence randomizing, within T1, whether workers from the same network work in the same shift or not), in order to help distinguish whether the important margin driving the observed complementarities in labor supply is “having a job” in general, or “working together” specifically.

Randomization is done in the office by one of the PIs or Research Assistants on the computer.

The randomization is done at the level of the index individuals – or equivalently, at the level of redistributive sub-networks.

No

120 (Determined by the number of job slots in the factory in the initial hiring wave. We will attempt to expand the sample by enlisting partnerships with additional factories or waves of hiring).

120

40