Allocating labor across small firms: Experimental evidence on information constraints

We document interest in labor reallocation among small firm owners in Ghana; 60% and 41%, respectively, self-report willingness to hire or work for the average local firm owner. Firm owners also exhibit high willingness-to-pay for information on a random subset of hiring firms and jobseeking firm ow...

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Bibliographic Details
Published inJournal of development economics Vol. 171; p. 103345
Main Authors Hardy, Morgan, Kim, Seongyoon, McCasland, Jamie, Menzel, Andreas, Witte, Marc
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.10.2024
Subjects
Experiment
Information constraints
Labor reallocation
Small firms
Labor reallocation
O15
O14
Information constraints
O17
Experiment
Small firms
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Summary:We document interest in labor reallocation among small firm owners in Ghana; 60% and 41%, respectively, self-report willingness to hire or work for the average local firm owner. Firm owners also exhibit high willingness-to-pay for information on a random subset of hiring firms and jobseeking firm owners during a Becker–Degroot–Marschak exercise. Conditionally random variation in access to this information generates immediate labor adjustments within and between firms, though rarely of firm owners themselves, and impacts firm closure 5-months post-intervention. Our findings suggest that labor market information of this kind is both valuable and actionable in our context. •Small firm owners self-report willingness to hire or work for other firm owners.•Firm owners exhibit high willingness-to-pay for directories of others’ self-reports.•Acquisition of hiring firm directories generates non-owner labor contraction.•Non-owner labor reallocation flows towards the city center and larger firms.•Acquisition of jobseeking firm owner directories generates (a few) mergers.
ISSN:0304-3878
DOI:10.1016/j.jdeveco.2024.103345