May 05, 2021 09:00:00

Research shows that prepayment of workers increases productivity

As the recession continues due to the epidemic of the new coronavirus infection (COVID-19), each country has launched economic policies such as benefits. The most important of these economic policies is the effects of various policies targeting the poor

, according to Professor Sendil Murinasan, who is well-known in the field of behavioral economics. The research result that 'the productivity of the person increases' was reported.

Do Financial Concerns Make Workers Less Productive? | NBER
https://www.nber.org/papers/w28338?orgid=151

How Poverty Makes Workers Less Productive: Planet Money: NPR
https://www.npr.org/sections/money/2021/02/02/961910289/how-poverty-makes-workers-less-productive

A study conducted by a research team led by Professor Murinasan is to 'examine the relationship between cash on hand and productivity for poor workers by shifting the timing of salary payments.' The research team divided 408 workers in Orissa, India, who work in agriculture during the busy season and in factories during the off-season, into groups, and 'prepaid salaries' to some groups. The we.

The research team has designated a two-week experimental period as the most difficult time for workers in the year. According to an interview survey just before the experiment, 71% of the subjects had unpaid loans and 86% said they had financial concerns. The work is to make disposable dishes for wholesale to restaurants, and the salary is based on the volume, but on average, it was expected that the amount equivalent to the monthly salary of each subject would be paid in two weeks. Since the unsuccessful ones are repelled at the time of inspection, each subject was given a cognitive load even though it was a simple physical labor.

A comparison of the prepaid and non-paid groups found that the prepaid group was significantly more productive and increased the number of dishes prepared per hour by 6.2%. Furthermore, because there were few defects in the prepared dishes, the work accuracy itself was improved.

The effect of this prepayment was greater for poorer subjects, so Professor Murinasan and colleagues concluded that 'giving workers advance cash would reduce the psychological burden of financial problems and improve productivity.' I am. According to a commentary by the American radio network National Public Radio, which reported this study, this kind of effect has been confirmed in simulated experiments conducted in the laboratory, but it is new that it was confirmed in actual labor. And that.

From the results of this study, Professor Murinasan and his colleagues argued that 'we should consider restructuring the welfare program with the psychological problems that arise from economic problems in mind.' He argues that providing cash to the poor creates a positive spiral of increased productivity and the ability to earn wages.