I study the role of financial incentives as signals of job characteristics when these are unknown to potential applicants. To this end, I create experimental variation in expected earnings and use
that to estimate the effect of financial incentives on candidates' perception of a brand-new health-promoter position in Uganda and on the resulting size and composition of the applicant pool.
I find that more lucrative positions are perceived as entailing a lower positive externality for the community and discourage agents with strong pro-social preferences from applying. While
higher financial incentives attract more applicants and increase the probability of filling a vacancy, the signal they convey reduces the ability to recruit the most socially motivated agents, who
are found to stay longer on the job and to perform better.
"Financial Incentives as Signals: Experimental Evidence from the Recruitment of Village Promoters in Uganda."
American Economic Journal: Applied Economics,
Asymmetric and Private Information; Mechanism Design
Health: Government Policy; Regulation; Public Health
Wage Level and Structure; Wage Differentials
Labor Turnover; Vacancies; Layoffs
Personnel Economics: Compensation and Compensation Methods and Their Effects
Economic Development: Human Resources; Human Development; Income Distribution; Migration