Financial incentives as signals: Experimental evidence from the recruitment of village promoters in Uganda

Erika Deserranno*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

I study the role of financial incentives as signals of job characteristics when these are unknown to potential applicants. To this end, I create experimental variation in expected earnings and use that to estimate the effect of financial incentives on candidates' perception of a brand-new health-promoter position in Uganda and on the resulting size and composition of the applicant pool. I find that more lucrative positions are perceived as entailing a lower positive externality for the community and discourage agents with strong pro-social preferences from applying. While higher financial incentives attract more applicants and increase the probability of filling a vacancy, the signal they convey reduces the ability to recruit the most socially motivated agents, who are found to stay longer on the job and to perform better.

Original languageEnglish (US)
Pages (from-to)277-317
Number of pages41
JournalAmerican Economic Journal: Applied Economics
Volume11
Issue number1
DOIs
StatePublished - 2019

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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