Centre for Development Economics
Department of Economics, Delhi School of Economics


The Ties that Bind Us: Social Networks and Productivity in the Factory


Farzana Afridi

Indian Statistical Institute, Delhi

Thursday, 14 November 2019 at 3:05 P.M.

Venue: AMEX Room (Second Floor)

Department of Economics, Delhi School of Economics

All are cordially invited

We use high frequency worker level productivity data from garment manufacturing units in India to study the effects of caste based social networks on individual and group productivity under fixed wage contracts. Using exogenous variation in production line composition for almost 35,000 worker-days, we find that a one percentage point increase in the share of own caste workers in one’s line increases daily individual productivity by almost 10 percentage points. At the line level, the least performing worker increases her effort by more than 15 percentage points when the production line has a more homogeneous caste composition. Production externalities that impose financial costs on co-workers and loss of own reputation due to poor performance can explain our findings. Our results, therefore, show that even in the absence of group-based financial incentives, social networks can improve both individual and group productivity through social incentives.

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