Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223564
Authors: 
Akerlof, Robert
Ashraf, Anik
Macchiavello, Rocco
Rabbani, Atonu
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8492
Abstract: 
Conflicts between management and workers are common and can have significant impacts on productivity. We study how workers in a large Bangladeshi sweater factory responded to management’s decision to lay off about a quarter of the workers following a period of labor unrest. Our main finding is that the mass layoff resulted in a large and persistent reduction in the productivity of surviving workers. Moreover, it is specifically the firing of peers with whom workers had social connections – friends - that matters. We also provide suggestive evidence of deliberate shading of performance by workers in order to punish the factory’s management, and a corresponding deliberate attempt by the factory to win the angry workers back by selectively giving them tasks that are more rewarding. By combining ethnographic and survey data on the socialization process with the factory’s internal records, the paper provides a rare glimpse into the aftermath of an episode of labor unrest. A portrait of the firm emerges as a web of interconnected relational agreements supported by social connections.
Subjects: 
layoffs
productivity
morale
relational contracts
JEL: 
J50
M50
O12
Document Type: 
Working Paper

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