Employer and Employee Preferences for Worker Benefits: Evidence from a Matched Survey on the Bangladesh Informal Sector

54 Pages Posted: 28 Jan 2019

See all articles by Krishna B. Kumar

Krishna B. Kumar

University of Southern California

Minhaj Mahmud

Bangladesh Institute of Development Studies (BIDS)

Shanthi Nataraj

RAND Corporation

Yoonyoung Cho

World Bank

Abstract

Informality is ubiquitous in the labor markets of developing countries, and requiring that firms formally register, pay taxes, and provide employee benefits stipulated in labor regulations to reduce such informality is challenging. However, a matched survey on employer-employee preferences suggests that mutually beneficial job benefits exist, and that encouraging their adoption might be feasible. Carefully designed discrete choice experiments on combinations of benefits related to compensation, leave and termination policies, working conditions, and accident insurance, along with incentives for employers, reveal the relative values that workers and employers attach to each benefit.The results show that workers tend to value advance notice for job termination and accident insurance, and that employers are not averse to providing these benefits. In contrast, workers find long working hours without overtime compensation to be highly undesirable, whereas many employers are generally unwilling to provide shorter hours or overtime pay unless they face the threat of fines or are offered substantial incentives for doing so. Our findings therefore suggest that encouraging the provision of termination notice and accident insurance may be relatively easy, but that increasing compliance with legal limits on working hours and overtime compensation is likely to require increased enforcement or substantial incentives.

Keywords: informality, worker benefits, discrete choice experiments

JEL Classification: J46, J32, J81

Suggested Citation

Kumar, Krishna B. and Mahmud, Minhaj and Nataraj, Shanthi and Cho, Yoonyoung, Employer and Employee Preferences for Worker Benefits: Evidence from a Matched Survey on the Bangladesh Informal Sector. IZA Discussion Paper No. 12064. Available at SSRN: https://ssrn.com/abstract=3323178

Krishna B. Kumar (Contact Author)

University of Southern California ( email )

Marshall School of Business, HOH 701
Los Angeles, CA 90089
United States
213-740-6533 (Phone)
213-740-6650 (Fax)

Minhaj Mahmud

Bangladesh Institute of Development Studies (BIDS) ( email )

E-17, Agargao, Shere Bangla Nagar
Dhaka, 1207
Bangladesh

Shanthi Nataraj

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States
310-393-0411 (Phone)

HOME PAGE: http://www.rand.org/

Yoonyoung Cho

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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