Absolute Versus Relative Performance Pay: Evidence from an Experiment Targeting Child Malnutrition in West Bengal
44 Pages Posted: 30 Sep 2013
Date Written: September 28, 2013
We carry out a randomized controlled experiment in West Bengal, India to test three separate performance pay treatments in the public health sector. Performance is judged on improvements in child malnutrition. First, we exogenously change wages of government employed child care workers through a basic level of absolute incentives. The second treatment introduces high absolute incentives. Finally, we also test for the impact of basic relative incentives on child health. All treatments include supplying mothers with recipe books. Overall, the results suggest that high absolute incentives reduce severe malnutrition by about 6.3% with controls and 4.9% without controls over three months. Large increases in weight are observed in boys as opposed to girls and same religion mother-worker pairs tend to be more productive in improving weight. This suggests that taste-based preferences may play a role even when workers are incentivized.
Keywords: performance pay, child malnutrition, absolute and relative incentives
JEL Classification: M52, I12, I38, J38
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