Layoffs and Productivity at a Bangladeshi Sweater Factory

Robert Akerlof, Anik Ashraf, Rocco Macchiavello and Atonu Rabbani
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Robert Akerlof: University of Warwick
Atonu Rabbani: University of Dhaka

No 393, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Conflicts between management and workers are common and can have significant impacts on productivity. Combining ethnographic, survey and administrative records from a large Bangladeshi sweater factory, we study how workers 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 likely had social connections - friends - that matters. Additional evidence on defect rates suggests a deliberate shading of performance by workers in order to punish the factory’s management.

Keywords: layoffs; productivity; morale; relational contracts (search for similar items in EconPapers)
JEL-codes: J50 M50 O12 (search for similar items in EconPapers)
Date: 2023-05-07
New Economics Papers: this item is included in nep-dev, nep-eff, nep-hrm and nep-lab
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Related works:
Working Paper: Layoffs and Productivity at a Bangladeshi Sweater Factory (2020)
Working Paper: Layoffs and productivity at a Bangladeshi sweater factory (2020)
Working Paper: Layoffs and Productivity at a Bangladeshi Sweater Factory (2020)
Working Paper: Layoffs and productivity at a Bangladeshi sweater factor (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:393

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