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Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector

Original source

Erika Deserranno; Philipp Kastrau; Gianmarco León-Ciliotta

Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector (2024)

working paper

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Audit-Protected Performance Measurement

"To limit collusion, a random 25% of households each week were "back-checked" either by phone or in-person (unannounced visits) by a team of field monitors, who asked the households to confirm the date and the type of the household visit."

Belief Updating Realignment from Wage Transparency

"Column 1 shows that the mean absolute difference between perceived PS pay and the truth is 482 SLL in Tpay=1 vs. 35,320 SLL in Tpay=0."

Cross-Country Inverse Meritocracy-Salary Gap Gradient

"Our findings indicate that in the public sector of developing countries, the fact that pay progression is often steeper than in higher-income countries and that promotions are less meritocratic (see Figure A.1) may constrain these government's capacity to provide high-quality public services."

Meritocratic Promotion Productivity Boost

"First, we show that a more meritocratic promotion rule increases the number of visits provided by the average worker by 22%."

Morale-Driven Productivity Loss versus Lobbying Divergence

"Overall, the results provide suggestive evidence that, with low meritocracy, increasing pay progression reduces productivity through negative morale effects."

Piece-Rate Financial Incentive Orthogonality to Promotion Tournaments

"Accordingly, Table A.13 shows that the effects of the meritocracy and pay progression information treatments on the number of visits do not interact with the incentives treatments (column 1)."

Placebo Validation of Information Treatment Mechanisms

"As a placebo check, we look at workers who correctly estimated PS pay at baseline and did not update their perception of pay progression in Tpay=1... Revealing the true PS pay has no statistically significant effect on their performance regardless of whether the system is meritocratic..."

Absence of Quantity-Quality Trade-Off in Performance Tournaments

"Such a quantity-quality trade-off does not exist in our context: the average visit length increases by 15% in Tmerit=1 relative to Tmerit=0 (Table 1, column 8), routine visits increase and most of the other types of visits increase too (Table A.4), and household targeting does not change (Table A.5)."

Reward Devaluation Productivity Slump

"In the new more meritocratic regime, lower pay progression reduces the number of visits by 2.045 (-21%), while it has no significant effect in the in the old, less meritocratic regime..."

Social Connection Dampening of Meritocratic Tournament Incentives

"We find that the meritocratic promotions treatment leads to an increase of 2.3 visits (35%) for workers not connected to the PHU in-charge (significant at the 1% level) and an increase of 0.8 visits for workers connected to the PHU in-charge... The difference between the two estimates is statistically significant at the 1% level."

Tournament Incentive Heterogeneity by Worker Rank and Horizon

"Figure 2 (Panel B) and the corresponding Table 1 (column 2) show that increasing meritocracy boosts the number of visits provided by "high-rank" workers (top 3 of their PHU) by 2.348, a 38% increase relative to the average for these workers in Tmerit=0."

Vertical versus Horizontal Pay Inequality Incentive Dichotomy

"In contrast to these studies, and in line with Cullen and Perez-Truglia (2022), we shift our attention to vertical pay inequalities between upper- and lower-tier workers for which the theoretical predictions are less clear."