Ethnic Divisions and Production in Firms

By Jonas Hjort. Social Science Research Network, 2014

313 citations recorded by the source corpus.

A body of literature suggests that ethnic heterogeneity limits economic growth. This paper provides microeconometric evidence on the direct effect of ethnic divisions on productivity. In team production at a plant in Kenya, an upstream worker supplies and distributes flowers to two downstream workers who assemble them into bunches. The plant uses an essentially random rotation process to assign workers to positions, leading to three types of teams: (a) ethnically homogeneous teams, and teams in which (b) one or (c) both downstream workers belong to a tribe in rivalry with the upstream worker’s tribe. I find strong evidence that upstream workers undersupply non-coethnic downstream workers (vertical discrimination) and shift flowers from non-coethnic to coethnic downstream workers (horizontal discrimination), at the cost of lower own pay and total output. A period of ethnic conflict following Kenya’s 2007 election led to a sharp increase in discrimination. In response, the plant began paying the two downstream workers for their combined output (team pay). This led to a modest output reduction in (a) and (c) teams - as predicted by standard incentive models - but an increase in output in (b) teams, and overall. Workers’ behavior before conflict, during conflict, and under team pay is predicted by a model of taste-based discrimination. My findings suggest that inter-ethnic rivalries lower allocative efficiency in the private sector, that the economic costs of ethnic diversity vary with the political environment, and that in high-cost environments firms are forced to adopt “second best” policies to limit discrimination distortions.

Subfields: Demography, Economics and Econometrics, Safety Research

View Paper: https://www.semanticscholar.org/paper/70a63578070110d79c8381f92dc32c90dd6a3a10

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Citations in the corpus

The Light and the Heat: Productivity Co-Benefits of Energy-Saving Technology (2019, background): “, 2007), ethnic boundaries (Hjort, 2013), and environmental disasters (De Mel et al.”
Social Incentives in Organizations (2018, background): “For instance the favoritism towards employees of the same ethnicity documented by Hjort (2014) became much stronger following contested elections and the violence that followed.”
The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports (2015, unknown): “Hjort (2012) studies how ethnic divisions impact productivity using data from a Kenyan flower plant.”
Management and Shocks to Worker Productivity (2019, unknown): “…(Costa, 1988; Holmstrom and Tirole, 1989; Lazear and Oyer, 2007), the empirical literature on evaluating the importance of task assignment within firms is relatively recent (Amodio and Martinez-Carrasco, 2018; Bandiera et al., 2007, 2009; Burgess et al., 2010; Friebel et al., 2017; Hjort, 2014).”
The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment (2015, methodology): “Jing (2015) shows that experimental measures of fair-mindedness predict medical Humphreys and Weinstein (2006), Bellows and Miguel (2009), and Blattman and Annan (2010) are prominent examples.”
Field Experiments on Discrimination (2016, background): “Hjort (2013) analyzes a natural experiment where a flower firm in Kenya randomly assigned workers to teams. Kenya offers a context with heightened ethnic tensions, and where the level of distrust among different groups may be particularly high. In the experiment, an upstream worker distributed flowe”
Types of Contact: A Field Experiment on Collaborative and Adversarial Caste Integration (2021, background): “Beyond common goals and intergroup cooperation, the contact hypothesis makes the claim that integrated groups should have equal status within the situation for 33 Similar to naturally occurring variation used by Hjort ( 2014 ) .”