Working Under Pressure : Improving Labor Productivity through Financial Innovation

In developing countries, financial transfers within social and kin networks are ubiquitous and frequent. Though these transfers have social benefits, pressure to redistribute income can introduce a disincentive to work by reducing the payoff of exe...

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Main Authors:	Carranza, Eliana, Donald, Aletheia, Grosset, Florian, Kaur, Supreet
Format:	Brief
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	LABOR PRODUCTIVITY SAVINGS ACCOUNTS GENDER GENDER INNOVATION LAB AFRICA GENDER POLICY FEMALE ENTREPRENEURS FINANCIAL SERVICES WOMEN AND AGRICULTURE
Online Access:	http://documents.worldbank.org/curated/en/119451545023411016/Working-Under-Pressure-Improving-Labor-Productivity-through-Financial-Innovation http://hdl.handle.net/10986/31029

id	okr-10986-31029
recordtype	oai_dc
spelling	okr-10986-310292021-05-25T10:54:36Z Working Under Pressure : Improving Labor Productivity through Financial Innovation Carranza, Eliana Donald, Aletheia Grosset, Florian Kaur, Supreet LABOR PRODUCTIVITY SAVINGS ACCOUNTS GENDER GENDER INNOVATION LAB AFRICA GENDER POLICY FEMALE ENTREPRENEURS FINANCIAL SERVICES WOMEN AND AGRICULTURE In developing countries, financial transfers within social and kin networks are ubiquitous and frequent. Though these transfers have social benefits, pressure to redistribute income can introduce a disincentive to work by reducing the payoff of exerting effort. This comes at a potential cost for the overall efficiency of the economy. The authors developed a financial innovation to study the impact of this redistributive pressure on workers’ labor supply and productivity. This innovation, a direct-deposit commitment savings account, enabled workers to convert productivity increases into private savings which cannot be accessed by others. In the first phase of their project, workers offered the direct-deposit commitment savings account increased their labor productivity and earnings by ten percent, which translates into an eighteen percent increase for workers who opened an account. The effect appears to be driven by workers increasing effort while on the job. Preliminary results show that the visibility of an account to one’s social network and the degree of redistributive pressure a worker faces are strong determinants of account take-up. This suggests that tackling the underlying cause for redistributive norms, the lack of consumption smoothing mechanisms, could improve output and growth in developing countries by addressing the root cause of the high demand for commitment savings products. 2018-12-19T19:26:28Z 2018-12-19T19:26:28Z 2018-12-17 Brief http://documents.worldbank.org/curated/en/119451545023411016/Working-Under-Pressure-Improving-Labor-Productivity-through-Financial-Innovation http://hdl.handle.net/10986/31029 English Gender Innovation Lab Policy Brief;No. 31 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research Africa Sub-Saharan Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	LABOR PRODUCTIVITY SAVINGS ACCOUNTS GENDER GENDER INNOVATION LAB AFRICA GENDER POLICY FEMALE ENTREPRENEURS FINANCIAL SERVICES WOMEN AND AGRICULTURE
spellingShingle	LABOR PRODUCTIVITY SAVINGS ACCOUNTS GENDER GENDER INNOVATION LAB AFRICA GENDER POLICY FEMALE ENTREPRENEURS FINANCIAL SERVICES WOMEN AND AGRICULTURE Carranza, Eliana Donald, Aletheia Grosset, Florian Kaur, Supreet Working Under Pressure : Improving Labor Productivity through Financial Innovation
geographic_facet	Africa Sub-Saharan Africa
relation	Gender Innovation Lab Policy Brief;No. 31
description	In developing countries, financial transfers within social and kin networks are ubiquitous and frequent. Though these transfers have social benefits, pressure to redistribute income can introduce a disincentive to work by reducing the payoff of exerting effort. This comes at a potential cost for the overall efficiency of the economy. The authors developed a financial innovation to study the impact of this redistributive pressure on workers’ labor supply and productivity. This innovation, a direct-deposit commitment savings account, enabled workers to convert productivity increases into private savings which cannot be accessed by others. In the first phase of their project, workers offered the direct-deposit commitment savings account increased their labor productivity and earnings by ten percent, which translates into an eighteen percent increase for workers who opened an account. The effect appears to be driven by workers increasing effort while on the job. Preliminary results show that the visibility of an account to one’s social network and the degree of redistributive pressure a worker faces are strong determinants of account take-up. This suggests that tackling the underlying cause for redistributive norms, the lack of consumption smoothing mechanisms, could improve output and growth in developing countries by addressing the root cause of the high demand for commitment savings products.
format	Brief
author	Carranza, Eliana Donald, Aletheia Grosset, Florian Kaur, Supreet
author_facet	Carranza, Eliana Donald, Aletheia Grosset, Florian Kaur, Supreet
author_sort	Carranza, Eliana
title	Working Under Pressure : Improving Labor Productivity through Financial Innovation
title_short	Working Under Pressure : Improving Labor Productivity through Financial Innovation
title_full	Working Under Pressure : Improving Labor Productivity through Financial Innovation
title_fullStr	Working Under Pressure : Improving Labor Productivity through Financial Innovation
title_full_unstemmed	Working Under Pressure : Improving Labor Productivity through Financial Innovation
title_sort	working under pressure : improving labor productivity through financial innovation
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/119451545023411016/Working-Under-Pressure-Improving-Labor-Productivity-through-Financial-Innovation http://hdl.handle.net/10986/31029
_version_	1764473481534111744

Working Under Pressure : Improving Labor Productivity through Financial Innovation

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