Income sharing: a social norm affecting productivity?
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
In countries where formal systems for insurance and income redistribution are absent or malfunctioning, income sharing norms are of great importance as a means to enable income redistribution as well as to pool the risk of negative income shocks. However, when sharing norms are coercive, they can have negative effects on economic efficiency. This paper emanates from an experimental study conducted by Hadnes, Vollan and Kosfeld (The dark side or solidarity, 2013). Hadnes et al. present evidence that entrepreneurs in Burkina Faso lower their productivity if they know that their solidarity network will be informed about a particular income opportunity. This result suggests that coercive sharing norms can be understood as a tax on profit, affecting the individual’s willingness to work. If individuals who are subject to coercive sharing norms choose to reduce their effort, this will affect their total earnings which has implications such as hampering wealth accumulation and investment and this could, in turn, prevent long-term economic growth in developing economies. In this paper we use results from a framed field experiment, conducted with 83 tailors in Burkina Faso, to expand the evidence on how sharing norms affect productivity. We use a similar experimental setup as did Hadnes et al. (2013) but with some adjustments in order to see if their result hold for other conditions. Our findings support existing evidence. We found that tailors reduced their productivity with 21% if they knew that a member of their solidarity network would be informed about a specific income opportunity. This paper contributes to the literature on sharing norms by presenting additional evidence that coercive sharing norms work as a tax on income and that this result holds for less extreme positive income shocks than what has been studied in earlier research.
Place, publisher, year, edition, pages
Field experiment, Sharing norms, Obliged solidarity, Informal sector, sub-Saharan Africa
IdentifiersURN: urn:nbn:se:uu:diva-226418OAI: oai:DiVA.org:uu-226418DiVA: diva2:725495
Bengtsson, Niklas, Forskare
Ohlsson, Henry, Professor