Work Over Just Cash: Informal Redistribution among Employers and Workers in Kampala, Uganda

About this event

This paper examines informal redistribution in the form of work in small and medium enterprises in Kampala, Uganda and its drivers. Using a field experiment, we show that employers and workers systematically choose giving/receiving work over cash transfers. Decisions imply a large willingness to pay for work on both sides of the labor market. Work redistribution choices are unaffected by the economic and training value of the task, and employers pay for zero marginal product work. Removing stakes in the game also does not affect decisions, ruling out signaling and relational personal benefits as drivers. Employers and workers motivate work redistribution mostly with fairness considerations and, secondly, with the psychosocial value of work for workers. Results appear externally valid, as giving via work predicts increased hiring in the firm, but it does not lead to higher revenues, sales, or profits, confirming that work redistribution is unlikely to be productive.